Tips to Make the Most of Accounts Receivable Financing

Your business’s accounts receivables represent the money that helps to keep your business operational. When you send out an invoice, it means you have made a sale. Receiving an invoice payment means there is cash moving into your accounts. If you get more customers, you are experiencing business growth.

The biggest downside of this is that unpaid accounts receivables mean there is money that could be used for something else. For example, it could be used to purchase more inventory or paying employees. While this is true, it is possible to free up some of these unpaid funds with accounts receivable financing.  

Utilizing Invoice Financing

With accounts receivable financing, you can free up cash to get through times when money is limited or to help expand your business. To make the most of this financing option, you need to know what to do. Keep reading for some tips and guidelines to use.

Get Things Organized

It is important to make sure all your accounts receivables are in order before starting to think about accounts receivable financing. Figure out what customers have unpaid invoices if they are late and the total amount of money that is waiting to be paid to your business. Getting organized will help you do this, but make sure you stay that way, too.

Every customer should have an individual file, which includes their initial credit application and all the correspondence you have sent them. This, along with the invoices and overall payment history, will give you a better picture of your customer, their creditworthiness, and payment history.

Create Clear Terms and Conditions for Your Customers

You need to ensure there is no doubt in your customer’s minds about what your terms and conditions for credit actually are. It is smart to have contracts in place with customers you have given credit to. If you must change the terms and conditions, be sure to have a new contract signed before additional credit is given.

Check New Customer’s Creditworthiness

Don’t extend credit to a new customer if you haven’t check to see if they are creditworthy. To do this, begin with a credit application and request credit references. If you are currently working with accounts receivable financing company, they can handle this for you.

If you want to increase your business’s cash flow and avoid dealing with accounts receivable, then accounts receivable financing may be the ideal funding option for your business. 

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