There are many factors that can get in the way of proper invoicing and when the money is slow coming in from reputable and solid customers, then there is a fly in the cash-flow ointment for sure.
A factoring company such as ours comes across these scenarios many times.
One problem that entrepreneurs face that can get them into a cash-flow bind is when stay involved in the credit approval process.
Sure, they started the business as a one or two-man shop and there wasn’t anybody else around to sell to customers and extend credit terms.
However, as the company grows, so do the tasks of the owner. One of the smartest things they can do is to get themselves out of the credit approval process.
Yes, you want the company to grow. Yes, you want to add more customers. Yes, you want to add new revenue to your bottom line.
But, if you don’t have an objective credit policy in place administered by an objective staff member, you could be letting customers slip in who are not going to pay you on time or, perhaps pay you at all.
Secondly, if the customers know you are the one who approves the terms, they will search you out and waste your time.
With a factoring company such as Forward Business Credit, we have strict controls and policies in place to keep on top of receivables. Even if these are some of your best paying customers, it is always wise to have a disciplined approach to monitoring receivables.
This sets the tone for interaction with the company. They know that when it comes to receivables, your company is not sloppy and uses a very strict system of keeping tabs on payments and ongoing creditworthiness.
That’s another benefit of using a factoring company when you need cash quickly for payroll, shipments, taxes, etc.
You can compare the policies you use with the policies we use to avoid situations where credit is getting approved, but payments are not coming in.