While generating revenues, managing expenses and earning profits is important, proper account receivables management is important as well. It’s a pretty simple concept: the more efficient your receivables are managed the better your cash flow. The better the cash flow, the quicker your payables are paid. When that happens, you don’t have to worry about keeping creditors at bay or making payroll on Friday because your balance sheet is strong.
One of the most frequent questions I get from new clients is how to tell customers about factoring, what is going to be required on the part of the customer and how the customer is going to react to their vendor using a factoring company.
Invoice Finance -- what exactly is it? Well, candidly, it's just another term used for traditional invoice Factoring. Within our niche industry, we hear all kinds of names for the same basic service including invoice finance, accounts receivable finance, invoice factoring, factoring, invoice discounting, working capital finance, etc. The list seems to get longer each year. We're not really sure why people want to come up with different names for the same basic process, but maybe that's just an effort to try to be cool...or maybe people just forget to use the same name and so they choose that name that is on the tip of their tongue...and all of a sudden the names just keep evolving like a good old fashion game of telephone (like you use to play when you were 8 years old)!
Let's face it, when you need cash for your business for growth, to make payroll, to purchase equipment or raw materials, it isn't always readily available. The traditional places entrepreneurs think they should go are a bank (for a loan) or Angel or venture capital investors (for equity). In today's investment climate, both are probable dead ends...why??
