The business world is operating at a faster pace than ever before, and it’s not going to slow down anytime soon. However, business owners are realizing that staggered payment schedules may be getting in the way of their growth potential.
Staggered Payment Schedules Are Standard
Issuing invoices with staggered payment schedules are standard in business-to-business transactions. This means customers have aging windows in which to pay off the balance owed. Most staggered payments schedules can range from 30 up to 120 days. The reason customers are given a period of time in which to pay is that they also have expenses, and an invoice may fall lower on the overall hierarchy of liabilities.
Slowing Down Cash Flow
Unfortunately, when a business has to wait 30, 60, 90, or 120 days to receive revenue, cash flow suffers. For new and small businesses, a strain on cash flow could mean payroll isn’t met or vendors aren’t paid. If a business is trying to position itself for growth, delayed payments on open customer invoices may result in plans being put on hold, or take on unnecessary debt through bank loans. Getting fast access to revenue means business have the necessary capital on hand to grow and thrive in an increasingly competitive landscape.
Eliminating Staggered Payment Schedules
To eliminate staggered payment schedules, businesses are turning to a debt-free financing method known as factoring. Unpaid customer invoices are submitted for factoring, and are monetized immediately. Instead of waiting for customers to pay, businesses can quickly get access to revenue. On the customers’ side, nothing changes. They still have to adhere to the staggered payment schedules printed on their invoices. Factoring is a way to leverage receivables for fast working capital without having to resort to short-term loans. Businesses across all industries use factoring to maintain a healthy cash flow and build reserves for growth projects. In addition to eliminating payment schedules, factoring also prevents open invoices from going to collections with a fast turnaround. In a sense, factoring automates a good portion of the accounting process.
At FSW Funding, we provide the most comprehensive factoring program, so businesses no longer have to track payments from multiple customer accounts. Contact our offices today to start freeing up your accounting resources and eliminate payment schedules.