accounts receivable

When small business owners struggle with paying bills and keeping up with payroll, it’s time to take a hard look at ways to ease the cash flow crunch. Are they missing an opportunity to manage their money more effectively? Are they taking advantage of financial options that could work well for their business model?

One solution to the cash flow challenge lies in the funds sitting in each company’s stack of accounts receivable. With the cost of borrowing, business owners should look at the money stuck on their own balance sheet: the unpaid invoices that their customers owe them.

When you put your accounts receivable to work, you stabilize your cash flow and enjoy greater financial peace of mind. You can pay bills, maintain operations, and plan for the future. Here are three tips on optimizing your accounts receivable.

  1. Ensure that each customer is creditworthy. The first piece in the accounts receivable puzzle is having the confidence that every customer that you take on will pay your invoices. Relying on instincts and intuition isn’t enough. Develop a strong credit policy and stick with it for your own protection.
  2. Make collections a consistent priority. With so many tasks to juggle, following up on unpaid invoices can fall by the wayside. It’s not easy to ask customers for money, especially when you need to ask for more work from them at the same time you are nagging them to pay. Yet you cannot delay collecting.
  3. Pay attention to payment terms. To close a sale, you may need to take extend payment due dates beyond what is wise for your company. Can you wait 45 days, 60 days, or even 90 days? These will be difficult decisions. Can you really afford to give your customers what ends up being free financing?

The good news is that you can easily turn your accounts receivable into money in your pockets through a debt-free cash flow solution: factoring.

When you choose to factor your invoices with a top factoring company, you take a big step forward in managing your money more effectively. You also gain a business partner with experts in both credit and collections. Let the factoring company’s in-house credit department protect you against business losses and let their collections professionals follow up on payments with your customers. You can relax and focus on future sales when you take to those customers.

In addition, when the factoring company pays you upfront for work you’ve completed, you can take on customers regardless of their payment terms. Getting an advance upon submitting your invoice to the factoring company means that you can pay bills and work on making your business more profitable without waiting 30, 60, or even 90 days to get paid.

If you’re ready to optimize your accounts receivable, get started today with a no-obligation factoring rate quote.

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