Making sure your small business receives its customer payments on time is critical to the financial success of your company.
Stop and think for a moment about where you would be if your customers were paying you whenever they wanted to?
For starters, it would be hard for your small business to build capital. Secondly, you would have less money on hand for your own business bills. Lastly, you would likely get a reputation as not being one of the most organized companies around.
So, do you want to have financial issues and a reputation as being unorganized, especially when it comes to financial matters?
In order to avoid those issues and more, look at how invoice factoring could assist your small business and then some.
Understanding the Importance of Timely Payments
So that your small business can decrease the odds of developing financial problems, keep these pointers on your plate:
- Get invoices distributed in a timely manner – First and foremost, making sure your invoices get out to your clients in a timely manner is critical. If you’re running behind on sending them out, you can’t entirely blame clients in getting your money to you on time, even though they should be expected to meet deadline dates more times than not. If you do not find the time yourself to handle invoices, look to hire someone (in-house or outsource) who can do just that. With many small businesses, employees are juggling multiple roles, so invoicing might fall to one individual or even the boss themselves. No matter who is in charge, don’t fall behind on this important aspect of your business;
- Seeking outside help – In the event your invoicing game is falling behind or flat out not getting the job done, you may search outside the business for help. When looking for a provider, make sure you compare receivables factoring companies, and do your homework before settling on a choice. If you’re unsure of how receivables factoring companies can assist your business, take the time to investigate. Essentially, such companies purchase your receivables at a discounted race, in turn supplying you with the immediate cash flow your business is seeking. There are both online and offline companies in this line of work to help businesses; companies (including yours if you need this kind of service) should do their diligent homework to see what best suits their needs. Another important item to note is your small business will receive the bulk of the invoiced figure (money) in a short amount of time (a day or so), with the remaining amount payable at the time your customer pays up. Take note that most of these companies do charge a standard fee for their services;
- Going the collection agency route – Some small business will opt to go the collection agency route, looking to gather the money owed to them. Remember that even though collection agencies are oftentimes successful at recouping the business owner’s owed money, the business itself is charged money for using such agencies. In many instances, a collection agency won’t be called in to go after late customer payments at least for a couple of months, giving the small business and customer every opportunity to work out the belated payments. By sending out letters and/or placing phone calls to the customers, the collection agency attempts to recoup the money owed the business. Lastly, the agency chosen will typically charge a business (contingency fees) at the time it has collected from the customer.
No matter how your small business goes about gathering the money owed it; make sure you do your research, seeing the best way for you to get your money.
Lastly, do your best to keep your finances in the black as much as possible.
Especially when it comes to smaller businesses, running low on financial capital can come much sooner than it can for larger companies.
When you stop and think about it, all it really takes is for a few delinquent accounts to start your small business down a road of financial challenges.
In order to do your best to avoid that route, don’t think small in determining how best to receive your funds.
About the Author: Dave Thomas covers small business topics on the web.