What to Do When Clients Take Too Long To Pay

If your clients are taking more than 60 days to settle their invoices, you can be sure that you are not alone. This is a very common situation and a significant cause of stress to many small and mid-sized business owners. Invoice finance Central Coast is a clever way to deal with this problem.

Having a profitable business does not necessarily mean that you have a reliable cash flow. Quite the opposite, many times a business may have great profits and a very unreliable cash flow. This is because your clients are paying you in 60 days, but you need to pay employees every week, rent and suppliers. Although the numbers may work in the long term, in the short term you are left with very little cash.

But, what do you do if you are new, growing or just don’t have a lot of funds in the bank? You can be sure that you are unlikely to avail a regular business loan. Business loans are hard to get. A better option would be to use invoice discounting Australia. Invoice discounting Australia is a form of financing that is not offered by a bank – it’s offered by a debt factoring company.

Invoice discounting Australia, as it name implies, involves selling your invoices for immediate cash, at a small discount. Its value proposition is very simple. You should be willing to discount between 1.5% and 6% from your invoices to get paid now! Considering that many business owners offer a 2% discount to businesses that pay within 10 days, invoice discounting Australia offers a similar proposition.

Of course, invoice discounting Australia is not for every business. It works best when your business makes profits above 15% and if you use the cash you make to pay for business expenses or to create new business opportunities.
Debt factoring companies always purchase your invoices in two installments. The first installment, referred to as the advance, covers up to 85% of the invoice. The remaining 15% is rebated once the customer actually pays the invoice. So, if you are sitting on a whole bunch of slow paying invoices, be sure to consider debt factoring.
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