Invoice Factoring

When the world faces an economic downturn we all face the reality of running out of cash. Your business is going well and turnover is growing according to your plan but during this time of economic tough times your cashflow just tends to run out. You find yourself chasing your customer’s for payment. It seems to be an ongoing circle with everyone chasing their clients for money. There are ways to improve your cash flow during a recession.

Keep an eye on your Cash Flow

Make sure you check your bank balance every day and keep a cash flow forecast of what cash should flow in daily. Be aware that during financially tough times late payments can become commonplace as everyone is in a similar position to you. Having a cash management system in place can give you an early warning that cash flow may develop problems.

Collect Cash Efficiently

Be sure to have an efficient cash collection system in place. If you invoice your clients and they have 30 days to pay, then start collecting the amount due on the invoice on day 31 if the cash has not flowed in yet. Don’t let it turn into a cash flow problem. A strategy you can adopt is to send a reminder notice close to the end of the 30 day grace period.

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In times of financial downturns in the market, loans get harder to get and interest rates can rise daily. By managing your cash flow situation you will know early what your cash flow needs may be and plan accordingly.

Reward Prompt Payment

Consider offering a discount to your clients if they pay within a certain specified time, e.g. 7 days. And, if they are late make sure they know they will pay a percentage of the invoice owing extra for late payment. Make sure all your invoices set these terms and conditions out clearly.

Invoice Factoring is an Alternative

Invoice factoring your invoices is a great alternative for small companies. Instead of playing with paper money in the form of invoices. An invoice finance company will give you up to 80% of your outstanding invoices. They also take over collecting the debt. Once the invoice finance company collects the debt the pay you the remainder of the total invoice amount less an agreed fee.

Confront Cash Flow Problems Head On

Don’t be like so many small business owners and refuse to admit you are heading for financial problems. If you can see trouble ahead confront it and put plans in place to try and head it off. It is much easier to fix a problem early on rather than wait until it becomes insurmountable.

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