How Can a Small Business Keep Afloat
For small businesses with some cash-flow problems and tight credit, implementing invoice factoring into your monthly financial plan may be the answer. Late paying clients can quickly lead to late or missed payments for your own bills.
Small businesses, especially recent start-ups, are often uncertain about when and if you'll receive payment on invoices, which you rely on because of limited cash funds. Banks are unlikely to be of any help in today's lending climate.
Take some minor solace in that creditors won't report late payments to the credit bureaus until they reach 30 days late. Late fees, however, can add up quickly, even reaching higher than your current interest rate.
Take hold of the situation and be proactive. You're cash strapped due to late collections on invoices. If at all possible, don't compound that by adding in late fees. The following three steps can help.
- Stay on top of your bills. Pay them as they arrive. Don't get charged fees because you misplaced the bill, or someone accidentally threw it out.
- If that's too much, mark your calendar with due dates. Plan for some lag-time for mailing payments, two weeks, and making them online, several days.
- Another great thing to do is to figure out when is best for your business to pay bills during the month. Ask creditors to change your due dates accordingly. Keep an eye out to make sure they change.
What could your business do with the cash from on-time invoice payments from your clients? What bills would you pay, avoiding late fees? Invoice factoring can make up the difference, giving you a more steady cash-flow. It may even allow you to take increased purchase orders.
When clients are on 60 or 90 day pay cycles, but your bills are not, invoice factoring can get you up to 90 percent of the invoice value. Once you deliver your product or service and hold the invoice, a factoring company can step in. With competitive rates, it usually takes about 24 hours to receive funds. Factoring is generally only used as needed, with no minimums, maximums or sales volume limits.
Give invoice factoring a try, and find out just how simple it is. Help your business continue to grow with more stable cash-flow.
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