Get a Healthier Cash Flow With Accounts Receivable Financing
Running your own company is difficult, and it’s made even harder by the fact that so many clients are slow to settle their outstanding balances. It’s not enough that you have to keep up with dozens of orders and provide a consistent product, but you also have to badger people to make sure you’re paid for work that’s already been done.
Since running out of money isn’t an option, any small business owner who’s dealing with cash flow issues should consider accounts receivable financing. This form of factoring allows you to get your capital promptly while saving time that would otherwise be spent making follow up and collections calls.
Reduce Wait Time
Companies both large and small have made it a regular practice to draw out billing periods as long as possible. This helps those enterprises to balance their books in an advantageous way, but it leaves small businesses like yours hurting for capital. While you can’t necessarily force a client to expedite their payment, you can accept money from a third party that then takes over the collections process.
By selling your accounts receivable, you get paid for an invoice and don’t have to worry about how long it takes your client to settle up. You end up giving the factor a small portion of the total balance, but it’s worth it when you get paid 60 days earlier than you otherwise would. Even better, you don’t have to discuss delinquent payments with your customers. Just do what you do best and leave the collections to the factoring company.
Steady Cash Flow
People without a lot of business experience might not understand why timely payments are so important. If you’re owed thousands of dollars in April but that money doesn’t arrive until June, you have to scramble to cover all of your May expenses. When you factor your accounts receivable, you don’t have to wonder about when payment will arrive or how you’re going to cover your workers’ salaries. By bringing some regularity to your collecting process, you can spend less time worrying about money and more time plotting out the growth of your business. Selling invoices isn’t just a means of getting paid more quickly; it’s a smart way to expand your company.
Capital keeps a business alive, and there’s no way to resuscitate a dried up cash flow other than an influx of cash. If that money isn’t coming right away from your clients, it’s time to look into accounts receivable financing.