Maintaining a positive cash flow is a delicate balancing act. Between overhead expenses, existing liabilities, and growth plans, managing receivables to ensure ample cash reserves can be challenging. However, there are a number of simple solutions available which make managing receivables easy and painless.
Most invoices have payments due 30 days or longer after a sale is made. The staggered payment schedule means that for a minimum of a month, a business is not seeing revenue from sales. To ameliorate this, many businesses are requiring down payments from customers for sales over a certain amount. The practice has pretty much become commonplace in most industries, and ensures a certain level of immediate revenue while waiting for the balance to be paid off on or before the due date on the invoice.
Managing Receivables With Late Fees
Late fees used to be a dirty term among businesses. Many entrepreneurs are afraid customers will push back or seek out competitors if a business starts declaring late fees on invoices. The truth is that customers are more inclined to pay ahead of the due date on their invoices if late fees are implemented, without negatively impacting sales or customer growth. It should be noted that there is a legal guideline for managing receivables with late fees. Any late fees must be announced and made clear to customers prior to sales. Signs should be posted at the place of business, on the company’s website, and printed visibly on any invoices. This protects businesses against claims and possible repercussions from customers stating they were never informed prior to letting their accounts age past the due date.
Managing Receivables Through Factoring
Factoring offers the fastest method of managing receivables. As invoices are generated, they are sent off for factoring and turned into cash, usually within one business day. Factoring is a simple exchange, so there are no hidden fees, no payment schedules, and no debt. Businesses do not have to worry about customer push back or a loss of sales, because factoring occurs on the back end. There are no extra legal measures needed to explain factoring to customers, nor to businesses need to require down payments.
Start Managing Receivables
FSW Funding helps businesses of all shapes and sizes to manage receivables quickly, efficiently, and affordably. Contact our offices today, and learn how our comprehensive invoice factoring program can automate your accounting and regain full control over your receivables.