Philosophers have long debated the existence of absolutes. Some absolutely insist that absolutes exist; others say there is no such thing. While they continue to wrangle with the question, business owners deal daily with the reality of more gray areas than blacks and whites. How business owners view invoices is one such gray area, and one that can impact business outlook.
As a business owner yourself, you have a certain outlook. Your business outlook last year could have been very positive. You may have been looking forward to tremendous growth and plenty of opportunities to innovate within your industry. But now, maybe your outlook isn’t as rosy. The realities of inflation and a tight labor market have set in.
The point of this post is not to discuss your outlook and whether it is right or wrong. Rather, let’s talk about how your view of invoices can impact your outlook. It is all about mindset.
Invoices Represent Customers
We tend to prioritize invoices as a representation of customers. Because our business is based on factoring accounts receivable, we pay very close attention to the invoices our customers offer for sale. Each invoice represents a customer we need to consider before we can approve funding.
Factoring A/R aside, your customers are represented by the invoices you generate. Your paper or digital invoices represent people engaged in business – just like you. Hopefully they are important enough to motivate you to take care of them.
Invoices Represent Assets
From a legal standpoint, invoices are considered a financial asset. They are a tangible asset that can be bought and sold just like goods. This is positive in the sense that you can sell those invoices to us in a factoring A/R arrangement. Doing so transforms paper or digital invoices into cash.
Having access to cash through invoice factoring could improve your business outlook when you are short on cash. In fact, invoice factoring could change everything. Those unpaid invoices suddenly become a positive asset you can leverage for funding.
Invoices Represent Debts
Although invoices are legally considered assets, they are also liabilities in the sense that they represent unpaid debts. You generate invoices because you have provided goods or services you expect customers to pay for. But until payment is made, you have outstanding debts that puts financial pressure on your company.
Obsessing over unpaid invoices could negatively impact your business outlook. If you are constantly worrying about getting paid by customers who do not seem to take their invoices seriously, you can quickly become discouraged. We have seen it time and again.
Invoices Represent Company Health
Perhaps you view invoices as a measure of your company’s health. A lot of business owners do. The concept is pretty simple: a steady stream of invoices dictates that your company is providing a steady stream of goods and services. If the invoice stream grows, you are selling more goods and services.
Keeping track of a steady stream of invoices obviously creates work for your accounting team. On the other hand, it also gives you motivation to keep doing what you’re doing. You are obviously succeeding as evidenced by the fact that customers are buying from you. If your invoices were scant, you would be in an entirely different situation.
We tend to view invoices as valuable assets to be leveraged for factoring A/R. As such, a steady stream of valuable invoices encourages us to have a positive business outlook. How about you? What is your take on the invoices your company generates? Your outlook is probably affected by how you view invoices at any given time.