It has been our experience that accounts receivable (AR) is one of the least appreciated aspects of running a business. Every business owner wants to get paid. But few enjoy the process of actually facilitating it. There are invoices to produce, follow-up messages to be sent and, in some cases, actions that need to be taken against slow payers. We have seen it all as an AR factoring provider.
AR factoring is often referred to as accounts receivable factoring, accounts receivable financing, and even AR funding. Regardless of the term you might prefer, AR factoring could be a useful tool to help you maintain cash flow while you sort out collection challenges. And that being the case, ask yourself this: does your company struggle with some of the more common AR challenges?
1. Getting Paid on Time
You send out your invoices with terms attached. Maybe your terms are 10 days; perhaps you offer a more liberal 30 or 60 days. But how well do your customers meet those terms? How often do they pay late as opposed to paying on time? Getting paid on time is one of the biggest and most frustrating AR challenges of all.
Your company depends on accounts receivable to stay alive. Every company does. When customers do not pay their bills, you don’t have the money you need to run your business. Furthermore, slow payers can inhibit your ability to grow, expand, and invest in making your company better.
2. Unkept Promises to Pay
Along the same lines as getting paid on time is having to deal with unkept promises to pay. Every business owner has experienced this. You contact a slow payer who tells you payment is on the way. The customer explains that some unexpected circumstances prevented sending payment earlier. A promise to pay ends the phone call and lets you get back to work. But then the payment doesn’t come.
3. Maintaining Positive Relationships
When customers become slow payers, they force your business to take action it otherwise would not. You do what must be done to get paid. Unfortunately, it can be very difficult to maintain positive relationships with customers you have to press for payment. Taking such actions just makes everyone uncomfortable. The discomfort can be significant enough to chase some customers away.
Having to go after slow payers is a no-win situation. If you continue to extend grace, you might find yourself extending it indefinitely. You might never get paid. But the minute you start pressing a bit harder, you risk sacrificing a long-term customer for a single unpaid bill. What do you do?
4. Following Up with Customers
Even when slow payers are not a big problem, companies are sometimes challenged to follow up after invoices are sent. Customers might not answer their phones or emails. Contact might be established, but the person in charge of handling payment isn’t in the office. The possibilities for delay are endless. Following up can be a time-consuming nightmare that makes business owners want to avoid receivables altogether.
So, how is your company doing? If these common AR challenges seem routine for your business, we might be able to help with accounts receivable factoring. Factoring some of your outstanding invoices could keep the cash coming while you and your accounting team figure out ways to overcome your most pressing AR challenges.
Accounts receivable can be challenging even for the strongest of companies. It is part and parcel of doing business. Our goal is to help companies work through those challenges with accounts receivable factoring solutions.