Even if your company has a well-established credit policy requiring such things as 30-day payment terms and prudent credit limits based on your analysis of your customers’ ability to pay, you will no doubt experience some payment delinquencies or worse, credit losses.
Maintaining a consistent collection effort and documenting a firm yet professional collection policy will help to reduce delinquent payments and credit losses in some cases.
It’s a fact of business life that in spite of your best efforts to deliver products and services to your customers one time, on-spec, and with the highest level of customer service, you sooner or later, you will be stuck with delayed or even non-payment.
Customers’ late payments can have serious consequences to your business’ cash flow and may be especially harmful to small and undercapitalized businesses. Delinquent payments and credit losses may, when combined with an already stressed balance sheet may lead to cash shortfalls when payday rolls around or it’s time to pay insurance premiums, rent, vehicle payments, or taxes—or purchase raw materials or inventory—or hire staff to take on bigger customers.
Millions of small and medium-sized business owners reduce the chances of credit losses and minimize the number of delinquent payments by choosing to factor their invoices. A reputable factoring company will serve not only as your credit “back office” to ensure that no single customer is provided more credit than prudent, but will also follow a professional and consistent collection policy to identify and resolve invoice and collection issues early.
It is common knowledge that resolving invoicing issues and keeping on top of collection will consistently improve a company’s cash flow and help to reduce credit losses by helping to prevent invoices from becoming severely past due. On average, the longer it takes for your customer to pay an invoice, the less likely it becomes that the invoice will be paid at all. Factoring companies know this simple fact and use it to assist you in your credit and collection practices.
Business owners also rely on their factoring companies to advance funds against approved invoices and accounts to provide steady and predictable cash flow. In connection with the sound credit and collection policies factoring companies employ, the small business owner has all its cash flow bases covered, while reducing the chance that that a collection problem with a single customer will lead to disastrous results.
Plan ahead by contacting Interstate Capital, a trusted leader in invoice factoring for thousands of business owners since 1993. You can pick and choose which invoices you wish to factor and obtain free credit checks, free direct deposits, free online back-office collection support, and more. It all starts with a no-obligation factoring rate quote.