Written by: Kevin Gardner
To run your business successfully, you have to meet certain obligations. Day-to-day operations can be stressful, and other long term goals can be difficult to keep track of. You need to find a way to organize your business and streamline your processes so that you can make the most of your time.
Building a solid business model and a reputation for dealing fairly is essential for a good business. One of the easiest ways you can ensure that your business is going strong is by making sure that your invoices are paid and processed promptly. Delayed payment can hurt your business.
Invoice factoring can be a good way to ensure that this part of your business is always fast and on time. This involves selling your invoices to a 3rd party at a rate of approximately 70% to 90% of the total. While you are selling your invoices at a discount, the immediate influx of cash can have plenty of positive effects on your business.
All businesses need cash flow to pay employees, purchase materials, and keep their business going. It's important that you always have access to some kind of cash flow for any unexpected expense like repairs or the need to purchase new equipment. If you don't have access to the cash to do this, it can further delay your production and cost your business more money. When you use invoice factoring you make sure that your cash flow is on time and continuous.
Avoid Late Fees
Invoice factoring has another positive effect on your business in preventing any late fees. If your customers don't pay the invoices you have sent out on time, this limits your cash flow and you're not able to pay your suppliers or other expenses.
This is especially problematic in a situation such as paying rent. Not only do you risk eviction, but you can accrue fees and also strain the relationship with your landlord.
If you have loans, then late payments can cause your financial institution to be reluctant in extending any future credit, or it may come with high interest rates.
Build Better Relationships
By having your invoices paid on time you can build a good relationship with all your suppliers and vendors. When they know that they can count on you to make full payment when it is due, they are more willing to work with you in new ways. Maybe they would give you discounts on future orders or put in a good word for you with other business contacts.
Good relationships with your suppliers are vital for the success of your business since, without them, you wouldn't be able to operate.
Free Up Employees
Invoice factoring also takes the guesswork out of invoicing and frees up your employees to do other tasks for your business.
Many times a lot of employee hours are eaten up by sending, processing, and recording invoices and the payment status they are in. When they don't have to deal with this headache, they can focus on other more important jobs.
Save Time and Frustration
Another benefit of invoice factoring is that it can save your business a great deal of time and frustration. Trying to track down unpaid invoices can be draining, time-consuming, cost you man hours, and delay further production.
It may be frustrating to not have the available cash flow to order new supplies until some customers have paid. You can eliminate this feeling altogether by using invoice factoring. The time that you save alone could be well worth the discounted rate that you sell these invoices for.
These are just several reasons that invoice factoring can have a profound impact on your business and its success. It's something that you may want to consider to help you streamline your processes so that you are able to focus on more important tasks like expanding production and furthering the success of your ventures.