Managing Accounts Receivable: Avoid Cash Flow Problems
Managing accounts receivable can sometimes be like trying to tame a wild animal. If given too much leeway, things can get out of control and cause cash flow problems. Occasionally, regular business expenses can exceed revenue, which places a strain on accounting. More often than not, the wait on payment from customers with open invoices causes a severe financial strain. Fortunately, there are a few steps any business can implement to make managing accounts receivable easier.
Using late fees for managing accounts receivable can make some business owners uncomfortable. The fear is that late fee penalties will drive away business. The truth is that if customers are lax in their payments, then not having those fees will only encourage delayed revenue. Charging late fees is a standard procedure for more businesses. The only precaution entrepreneurs need to take is to clearly state the late fees before a sale is made, and on the invoice. Charging late fees encourages timely payments, which goes a long way in managing accounts receivable.
Consumer financing is a great preventive measure for managing accounts receivable. Instead of waiting on customers to pay invoices in full, consumer financing spreads out the cost over monthly installments. The business still gets paid, and the cash flow is maintained, but consumer financing eliminates the need to send out reminders or use collection services. While consumer financing helps in managing accounts receivable, it also stimulates sales. By breaking down the cost into installments, big ticket items become more accessible to approved customers.
AR financing (accounts receivable financing) allows entrepreneurs to monetize open invoices to eliminate the lag in customer payments. Instead of waiting 30 days or longer, customer invoices are converted to immediate working capital. By using AR financing for managing accounts receivable, revenue becomes centralized. Instead of tracking multiple customer accounts, payments all come from the company providing the AR financing services. AR financing can convert open invoices to working capital within 24 hours to help maintain a steady cash flow.
Start Managing Accounts Receivable Today
If you would like to learn more about AR or consumer financing, contact Biz Com Loans today at 1-844-855-6267. We provide financing solutions for managing accounts receivable to ensure a steady cash flow and growth capital. Our team will work with your business to give a no-obligation analysis to find the right financing program for continued success.