INVOICE FACTORING TIPS
Developing a prompt approach to billing and collecting client payments is extremely important to maintaining the financial strength of your company. That’s why Integrity Factoring would like to provide you with the following invoice factoring tips for handling collections to improve company cash flow.
KNOW YOUR CLIENTS
Working with clients that you trust is the most important aspect of collections. When taking on a new client, you should check their credit rating and payment history. You should also ask for credit references and review them.
INVEST IN TECHNOLOGY
If poorly organized, the collection process can be very time-consuming. That’s why it’s important to invest in up-to-date computer software that can help you with communication, electronic invoices, and recurring billing. Ultimately, the right accounting software can help drive revenue to your business.
ESTABLISH PAYMENT TERMS
You need to establish payment policies that will motivate your clients to pay promptly and consistently. The terms you put forth should be provided to your clients upfront and agreed upon before any services take place. Keep in mind, however, that strict payment terms can lower your sales while more lenient policies may slow client payments. A good rule to follow is to require payment in full within 30 days. Furthermore, you can help motivate clients to pay you more quickly by offering a small discount if a payment is made within a certain amount of time.
The receivables clock immediately starts ticking for your company when you complete a service. For your clients, it starts after they receive an invoice. Waiting a few days after a service has been completed slows the payment process. To keep things simple and efficient, have your invoices ready to send the moment a project is complete to get paid faster.
STICK TO YOUR PROCESS
The ability to stay consistent with your customers about unpaid invoices is critical to the success of your business. While effective approaches vary, most trucking companies follow up their invoices with an email or phone call to their customers after 30 days. You can also include re-invoicing, late payment penalties, and enlisting a collection agency. Stick to a collections process that is most effective for your trucking business and remain diligent to it.
DON’T LET INVOICES BUILD UP
Client invoices may have a dollar value, but they are just a piece of paper until your client pays. To ensure you have enough cash flow to fuel your business, don’t carry around too many unpaid invoices on your books. You may also want to consider factoring as a way to quickly turn invoices into working cash.
Invoice factoring allows your trucking company to receive payments for the services you provide almost immediately. An invoice factoring company like Integrity Factoring buys your invoices by withholding a small fee for assuming the collections risk, then advances you cash on your invoices in less 24-48 hours. This allows you to focus on more important things like running your business. Not only does invoice factoring provide you with a valuable service, but you’ll also get the support you need to help your business grow.
Want more information? Contact Integrity Factoring by filling out our online form or call us at 1.866.834.7338 for ways to help manage collections and increase cash flow for your business. With over 12 years of experience, we provide clients with flexible funding solutions to help you grow and succeed.