Bay View Funding Blog

This may sound like a strange question, but have you taken everything into consideration when it comes to your customers with regard to prompt payment? 

Many companies have experienced the excitement of signing up a large company without necessarily thinking through late payment issues and the ramifications of this late payment on their business. At the end of the day, it is really up to you to manage the cash flow of your company. If it is possible to delay payment, more than likely this is exactly what your customers will do. 

Understanding how customers operate with regard to accounts payable could work to your advantage. 

1. When starting to sell to a new company, make sure and sign a contract and generate precise purchase orders so a solid agreement is in place just in case something should go wrong.
2. Always agree on the price of a good or service up front, especially when dealing with smaller companies where a purchase order is not always required.
3. Don’t offer terms unless this is something asked of you in order to get the sale. Automatically offering terms of 30 days or more will damage your cash flow.
4. Always invoice as quickly as possible on completion of delivery of goods or services. Large companies are well known for paying as late as they can get away with, thus using money that is due to you for other purposes.
5. If it is at all possible to get a deposit up front, make sure and ask for it.
6. Some large customers may spare money readily available for payment from a set budget, so invoicing as soon as possible may work to your advantage. It is worth checking in advance about budgets and cut off dates.
7. Establish a contact in the AR department so you always have someone to turn to should payment not be forthcoming
8. Don’t be shy about asking for payment, and make it easy for your customers to make payment. 

Generally speaking, lack of adequate cash flow is what is going to sink your company. Understanding how your customers operate, and what their payment cycles look like goes a long way when it comes to cash flow management, but sometimes a little help is needed. 

When bank loans are hard to access for various reasons, consider looking into the benefits of invoice factoring. Invoice factoring is a form of working capital financing for all businesses. The process is simple and provides quick and efficient accounts receivable financing when you need it. Rather than waiting for invoices to be paid tomorrow, a factor will purchase them today, giving you instant access to your working capital.