The Smart Way to Deal With Cash Shortages
It is normal for companies experience cash shortages at one time or another. This article will show you how to address a common problem that causes shortages and suggest some strategies to deal with them. If your company has serious cash flow problems, you should consider getting invoice finance Central Coast.
Let's look at the most common cash flow problem. In corporate sales it's common to give customers 30-60 days to pay. Thanks to the economy, most customers take longer to pay their invoices. This leaves you waiting up to two months for payment. In the meantime, your company needs to cover its expenses regularly.
The most common way to delay expenses is to speak to your own vendors and seek 30 to 60 day terms yourself. If you have been a good client to them, many will be happy to oblige in order to keep your business. However, if you renegotiate payment terms, be sure that you can meet the payments, otherwise you risk losing your vendors.
There are a couple ways you can accelerate your invoice payment cycle. One is to speak to customers and offer them a discount if they pay quickly. It's a common industry practice to offer a 2% discount to customers that pay in 10 days or less. If that approach is not sufficient, you should consider debt factoring your invoices.
Invoice finance Central Coast accelerates your revenues by using a financial intermediary who advances you funds against your slow paying invoices. The debt factoring company holds the invoice until maturity and settles the transaction with your company once the customer pays the invoice in full. The factoring fee is based on the factored volume, the credit quality of the invoices and other variables.
One advantage of debt factoring is that it's easier to obtain than conventional business financing. The impost important requirement to qualify is to have customers with good commercial credit ratings. It also works well for company whose assets are limited to good quality invoices from credit worthy customers. Invoice discounting Australia ensures that you are not crippled by intermittent cash shortages.
Let's look at the most common cash flow problem. In corporate sales it's common to give customers 30-60 days to pay. Thanks to the economy, most customers take longer to pay their invoices. This leaves you waiting up to two months for payment. In the meantime, your company needs to cover its expenses regularly.
The most common way to delay expenses is to speak to your own vendors and seek 30 to 60 day terms yourself. If you have been a good client to them, many will be happy to oblige in order to keep your business. However, if you renegotiate payment terms, be sure that you can meet the payments, otherwise you risk losing your vendors.
There are a couple ways you can accelerate your invoice payment cycle. One is to speak to customers and offer them a discount if they pay quickly. It's a common industry practice to offer a 2% discount to customers that pay in 10 days or less. If that approach is not sufficient, you should consider debt factoring your invoices.
Invoice finance Central Coast accelerates your revenues by using a financial intermediary who advances you funds against your slow paying invoices. The debt factoring company holds the invoice until maturity and settles the transaction with your company once the customer pays the invoice in full. The factoring fee is based on the factored volume, the credit quality of the invoices and other variables.
One advantage of debt factoring is that it's easier to obtain than conventional business financing. The impost important requirement to qualify is to have customers with good commercial credit ratings. It also works well for company whose assets are limited to good quality invoices from credit worthy customers. Invoice discounting Australia ensures that you are not crippled by intermittent cash shortages.
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