Every business owner knows that happiness is a positive cash flow! But entrepreneurs can be caught in cash crunch when there are unexpected expenses or customers pay their invoices late. The long term fix for this is a detailed examination of every expense, an analysis of pricing and considering additional financing. This is a time consuming process, and it won’t help meet payroll by Friday! This is when the entrepreneur has to drop everything and contact their customers to coax them to quickly pay their invoices. Since this is an emergency, the business owner is contacting their best customers who are most likely to respond to a plea for quick payment. Hopefully this will result in money flowing in the business owner’s best customers are wondering about the strength of the business and the slowest paying customers were overlooked.
Business owners who are in a cash flow deficit often look for additional capital when their cash flow solution could be as simple as establishing a collection policy. Following just a few steps can result in invoices being paid in a timely manner.
First, make sure your billing details are correct. Even if your providing service to company down the block, confirm where invoices are to be sent, who needs to be copied, and who approves your invoice for payment. An invoice sent to wrong email address is rarely forwarded. Make sure your customer understands your payment terms, find out if they will pay early if you offer a discount.
A week before your invoice is due to be paid, have someone from your office call your customer to confirm that your invoice is approved for payment. A little follow through will keep you informed and is especially helpful if your customer has suddenly found a problem with your invoice.
Simply monitoring your receivables will help speed up your cash flow. For companies that are taking on additional projects and customers this best practice of monitoring your receivables may still not provide the necessary cash flow. Growing a company takes lots of cash to meet additional payroll and operating expenses. Invoice factoring is simple solution to this problem.
Factoring companies buy the business owners invoices, providing steady cash flow that the entrepreneur can rely on to grow their business. Factoring does not create any debt for the business owner and the factoring company will assist in the monitoring of your invoices.
Call today or complete our quick online application form to find out how American Receivable can put your company on the road to success.
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