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invoice folder with a note that says unpaid

Surviving a Slow Paying Customer

Having a big company as a customer is both a blessing and a curse.  It’s a blessing having a large stable customer that provides a steady flow of purchase orders.  However, being a supplier for a large corporation also has a set of unique challenges not faced when doing business with smaller companies.

Asymmetry in Power Can Be Problematic

A large corporation has both the funds and the talent to change suppliers with little notice.  If you’re a small supplier to a big firm, you’re exposed to the whims and wants of that big firm.

Besides the risk of your customer changing suppliers the next biggest challenge can be slow pay.  Large companies are increasingly using their suppliers as an interest free lender. Often, stretching out payment way beyond agreed upon terms.  So how do you stay afloat when your customer is delaying payment and your cash flow is running out.

First insist your customer pay within the contracted terms.  Chances are the terms are net 60 from approval.  Be proactive and make sure your invoice is in payables, approved for payment on due date.  Get set up for your customer to pay you via ACH.

Invoice Factoring as a Cash Flow Aid

If you’re still running out of cash before your customer pays, a good option is factoring your invoices.  By selling your accounts receivable to a factor, you get instant cash without taking on any debt.  The factor waits for your customer to pay, while providing you with the cash you need to maintain operations.

Another service the factor provides is running credit investigations on your customers.  Just because your customer is a name brand company does not mean it has not been affected by this economy.  It is tempting to immediately start selling to a large corporation, but without a thorough credit investigation you increase the odds that your slow paying customer turns into a nonpaying customer.

Since 1979 American Receivable has helped their clients prosper by providing the cash needed to grow and a 42 year credit department that greatly reduces our clients risk of non-payment.  We are a top-rated factoring company according to business.com and merchantmaverick.com

Let the team at American Receivable help your small business through this difficult economic climate. Call Jack Stieber or Brad Gurney at 972-404-4726 or call complete our quick application form.