An enterprise operating in today’s hectic work environment and the extra competitive economy is likely to shut down if it runs out of money. It is therefore vital for such a business to get paid as soon as possible. Accounts receivable represent the amount of money that can keep a business afloat. Since cash is king, some ways have emerged that can be used to increase cash flow. Here are tips for using accounts receivable financing to ensure better management of accounts.
1. Maintain a Strong Working Relationship
A customer who has created a strong personal connection with a business is less likely to do anything to jeopardize that relationship. Happy clients are also less likely to forgo payments. Even if they’re financially limited, they will prioritize companies they share a personal relationship. Find more online information and resources at the FundThrough website.
2. Reduce Payment Terms
Many companies go with the net-30 payment terms because it comes out polite. However, such payment terms are likely to affect a company’s cash flow. Invoicing via email is one way of reducing payment terms as it takes less time than paper mail. Since net-30 is not mandatory, try setting your own payment terms such as net-15 or even billing for part or all job parts up front.
3. Minimize Payment Barriers
One can optimize factoring receivables by offering multiple payment options that customers are comfortable with to satisfy their debts. Today, there are several payment methods including credit cards and PayPal. While issuing an invoice, ensure to include links for wire transfers, electronic checks, or credit cards to satisfy the customer and warrant fast payments.
4. Impose Credit Limits
As a company, it is essential to establish a credit policy which describes who, what and when. Overdue clients should not be spared if they make it a habit of skipping payments since it will affect the company down the line. If a company has a new customer, it is equally important to use credit limits if they request for credits. Take some time and get a clear picture of their payment habits before lifting such a ceiling.
5. Consider Hiring a Factoring Company
Collection is probably the most challenging part of accounts receivables. Factoring finance companies can help a business owner avoid making that call demanding payments of overdue invoices. Extending one’s accounts management to a different firm lets the business owner focus on running the business without unnecessary distractions.
The underlying point is that cash flow is a critical element in financial performance. Understandably, most payment delays are not deliberate but are sometimes caused by customers’ busyness. The above tips will help a business owner leverage factoring and ultimately provide cash that he or she needs while further establishing the business. Get help from a company offering invoice factoring Canada and help a customer help your business grow stronger than before.