Over the last year or so, we have published a number of blog posts discussing business cash flow and its relationship to accounts receivable factoring. This is another such post. However, we want to take a look at the topic from a different angle: the concept of good cash health.
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.
Cash flow is something we talk an awful lot about here at Thales Financial. Why? Because one of the biggest advantages to factoring accounts receivable is having access to cash when companies need it most. Given how important cash is, it’s surprising to know that so many small businesses don’t truly understand how critical maintaining cash flow is.
Debt factoring in Utah is what we do here at Thales Financial. We engage in a form of account receivable funding based on the invoice factoring model. Clients sell unpaid invoices to us in exchange for fast cash. We earn money by charging a fee for the service we provide.
Accounts receivable (AR) factoring companies like Thales Financial do not make loans or charge interest. Instead, factoring involves buying invoices and paying cash advances on them in exchange for factoring fees. A question we frequently hear in relation to fees is how AR companies determine them.
As a firm that specializes in accounts receivable factoring for small business, a big part of our success lies in our intimate knowledge of how business accounting works. We make it our business to know and understand things like the accounts receivable turnover ratio. Do you know what that is?
Keeping track of accounts receivable gets more difficult as a company grows. It is normal for accounts receivable to grow along with revenues. So the larger a company gets, the more it needs effective ways to track receivables so as to manage cash flow. Tracking can be helped considerably by creating an aging schedule.
We have worked with all sorts of clients in our role as an accounts receivable (AR) factoring company. Although it doesn’t affect us directly, one of the difficulties we frequently observe involves a company trying to figure out how quickly to cut off non-paying customers. The decision is not always an easy one to make.
We are in the business of factoring accounts receivable on behalf of our clients looking to leverage unpaid invoices for fast cash. Clients come to us for a host of reasons, not the least of which is maintaining positive cash flow. But every now and again, we work with a client that needs to facilitate faster growth due to lower margins.
How do you feel about accounts receivable? Some business owners consider them a liability in the sense that they represent uncollected money. But from a purely legal and accounting perspective, accounts receivable are actually assets. Even better, they are assets that can be leveraged to raise cash. Accounts receivable factoring is a tool for doing just that.
Our business is to help other businesses secure financing. In business, ongoing access to financing is important. And yet there isn’t a single source that works for every company in every situation. For our money, the best way to help businesses is to tailor financing to their circumstances. That’s what account receivables funding is all about.
We have the opportunity to work with all sorts of companies that come to us in search of accounts receivable funding. As a factoring company, our service involves purchasing invoices and collecting on them. If there is one thing we have learned from years of experience, it’s this: invoicing terms can have a significant impact on collection.