Staying On Top Of Accounts Receivable

Many business owners and in-house accountants have a love/hate relationship with accounts receivable. If accounts receivable numbers are high, business is great and sales are being made. Simultaneously, having a high number of receivable means that customers still owe money, and the lag in payment can cause a strain on cash flow. Fortunately, there are a few practices business owners can employ to decrease the wait for payments, and maintain a healthy cash flow.

Get A Deposit

For businesses which do not operate on a point of sale system, getting a deposit on large orders is not an unreasonable thing to ask. In fact, customers are more likely to pay off the balance faster to clear their own records, rather than waiting until the last minute to make a remittance on invoices with aging periods of 30 days or longer.

Charging Late Fees

No one wants to be too firm with customers, but getting paid in a timely manner is what keeps businesses running smoothly. Charging late fees can ensure customers will pay invoices on or ahead of schedule. Late fees also act as a deterrent, and reduce the number of invoices which get sent to collection services. The catch is that businesses must make it very clear before the sale, and also on the invoice, that lat fees are applied after the due date.

Accounts Receivable Financing

Accounts receivable financing, or invoice factoring, is a means by which businesses can monetize open invoices for working capital. Instead of waiting on customers to send payments, invoices are sent to an accounts receivable financing service, where they are converted to working capital within 24 hours. Businesses use this service to clear a backlog of open invoices, and to get paid for invoices as they are generated. Accounts receivable financing provides a central source of revenue, and completely eliminates the need for collection services. Invoice factoring makes accounting more streamlined, and ensures a healthy cash flow, without having to impose late fees or demand up front deposits.

Learn More About Managing Your Receivables

If you would like to learn more about accounts receivable financing, or if you would like to explore other options to take the strain off of cash flow, contact Vantage Commercial Capital. We work with businesses of all sizes, across all industries, to help remove cash flow problems and promote growth.