Collection of payment from customers can be nothing short of a nightmare when it comes to specific clients. Small and large businesses consistently have issues collecting payment in a timely manner. The lack of timely payment can inhibit a business from operating in a normal fashion. A company that has spent most of their labor hours on two clients that are two weeks late on paying can dry up cash flow. Invoicing factoring is a lending option for a company that has invoices out to be paid but need the cash now!
Why Factoring is Popular
The small business that has just landed a huge client might not be as pushy on agreement to their payment standards as they would with a smaller client. Large companies can take weeks to pay as an invoice has to go through their accounting department that might be quite a bit behind. Other companies try to take advantage of a smaller company’s need for a specific contract. Laying out payment terms clearly with late payment fees is going to be essential regardless of who the client is.
The time that is spent waiting for a payment to clear in order to start work on a new order or be able to cover payroll on time can be stressful to say the least. For those businesses that have not nailed down payment terms in order to keep healthy cash flow factoring can be a great alternative. The last thing that you want to do is to aggressively confront a long-term client that has always paid. There could be a mitigating reason why they haven’t paid so a polite follow-up email is sometimes all that it takes.
Benefits of Invoice Factoring
Traditional bank loans can be extremely complicated and require you to provide quite a bit of paperwork. You will have to have a business plan and tax statements for a traditional loan. The company that handles the collection of payment is important as a pushy factoring company can spell disaster for client relationships. Account receivable could have an immense amount coming in but until it does business will remain stagnant. Invoice factoring eliminates these stagnant periods in order to operate business as usual say the experts at chartercapitalusa.com.
Importance of Picking the Right Company
The importance of doing the appropriate research on any company you are entering into a financial agreement with is imperative. The company should be established in the industry and willing to adhere to your collection principles. You do not want to pick a factoring company aimed at convenience costing a company their clients due to being absurdly pushy or rude. The percentage that is charged of the bills that are paid is important as well as it will directly be impacting the revenue made from a specific contract. Make sure the contract can be terminated at any time as long-term commitments could be a nightmare if you decide to staff your own collection department.
Your business should consider invoice factoring if you find yourself constantly slowing down production until an invoice is paid. Take control of your business by finding the right factoring company today!