There are not many certainties in life but one thing you can know for sure is that people will not pay their bills on time in a struggling economy. Maybe they are taking advantage of the poor economy excuse or paying their bills late because it seems like everyone else is, too. Or maybe they are genuinely falling behind and can’t get their finances in order to pay. Whatever the case, it is going to happen and preparation is the best way to deal with this tide of slow payment.
Use Invoice Factoring and Credit Checks to Stave Off Unreliable Customers
One way to be prepared is to know what options are available to get money when you need it instead of waiting for invoices to come in. Account receivables factoring or invoice factoring is an alternative financing method that has grown in popularity in recent years due to the economy. Factoring services buy up to 99% of the value of your invoice so you have your money right away. They usually take less than two days to process (unlike a bank) and they rely on the creditworthiness of your vendors rather than your business.
A factoring company can be a great way to secure money to maintain your cash flow especially if you are at risk of not covering payroll, failing to pay your own bills, or fear you might have to forgo a necessary purchase or investment due to lack of cash flow.
Run a Credit Search on Potential Customers
Another way small businesses are increasing the likelihood of getting paid on time is by researching and conducting credit checks on their customers. With purses closing and flat sales across the board, some small businesses are too quick to get the sale without thinking of payment. They are so grateful for the sale, they don’t want to risk it by asking too many questions. However, it is essential to do some research and even run a credit check to see if customers have a history of not paying their bills on time.
View Invoice Factoring as a Safeguard against Late-Paying Customers
By using a factoring services company, you don’t have to worry about relying too heavily on customer payment in order to conduct your business and keep a health cash flow. Though factoring account receivables may not have been a popular financing option 10 years ago for industries outside of manufacturing, invoice factoring is used more and more each day as a safe and secure way to secure cash during hard times.