14 Jan Turn Unpaid Invoices into Cash
Do you have customers that take a long time to pay their invoices? Maybe they are slow or perhaps you have agreed to longer payment terms in order to obtain their business! Whatever the reason there is a solution to your cash flow issues concerning unpaid invoices. You can turn unpaid invoices into cash flow for your company.
Invoice Financing Solutions
Many customers do not pay their invoices in the standard 30 day period. Some will let them go for 60, 90 days or even longer. They may be slow payers or it may be entirely inline with the contract that they have with your company. This delay period represents a time period where you do not have access to the cash and cannot invest in raw materials, new equipment or even pay operating costs.
With an invoice finance solution, a company can essentially obtain a loan based on the value of the invoices outstanding taking into account the quality of the companies that have outstanding invoices. They need to be in good standing from a credit perspective and have a good record of paying their invoices.
Assuming that they are, your company will receive a percentage of the outstanding invoice. The percentage depends on the terms negotiated, interest rates, fees and the length of time it is anticipated that the invoice will remain outstanding.
This cash flow can really help your company deal with purchasing additional raw materials, equipment you may need etc. This can be the life blood of many companies who are dependent on these outstanding invoices.
Not all Invoices Will Qualify
It is important to mention that not all outstanding invoices will be considered for the invoice finance solution. Small invoice amounts and companies with poor credit ratings are a couple of the reasons that some invoices may not be included.
As invoices are paid, the proceeds are used to repay the loan, the fees and any other expenses involved. There are options to have the Invoice Financing company manage collections or it can be left in the hands of your own collections department.
As additional sales are completed, these new invoices can also be included as candidates for additional cash flow via invoice financing based on the criteria agreed to. Company managers must consider how the customer relationship is managed from a post sale perspective. It can get a little complex if a separate collections company is managing the old invoices and your sales team is attempting to achieve new sales.
Cash Flow is the Life Blood of Your Company
Cash flow is one of the most important elements that company managers must pay attention to. Utilizing an Invoice Finance solution is one way to manage cash flow enabling cash to be available much more quickly in the time line. Managers should also note that this solution will impact their balance sheets in appropriate ways.
Why not speak to one of our agents to determine if an invoice financing solution would be appropriate for your company to turn unpaid invoices into cash.