Everyone misses a payment at some point. Big corporations, small start-up companies, even individuals with a phone bill. While Treasury data shows that nearly 98 per cent of small business invoices are paid within 30 days, the remaining unpaid invoices account for almost $200 million dollars every year.
To prevent this, businesses must work out their best practice for chasing unpaid invoices.
1) Tackle the unpaid invoices directly
In many cases, you have a precious business relationship to maintain while you also require ongoing cashflow.
Clear, concise communication is necessary here - you may also need to prepare for payment plans with debtors. However, in more severe cases you may have to resort to more inflammatory measures like letters of demand or even legal action.
While a partnership invoice finance solution will ensure cashflow is steady, taking on unpaid invoices is a delicate situation. Businesses need to empathise with the debtor; invoices do not necessarily remain unpaid because of malice, but rather widespread economic factors - factors that may affect their own company one day.
It is as much about relationship management as it is securing business finances - although there is another way.
2) Delegate the duty of unpaid invoices
Using a debtor finance company frees up money in a business' ledger, using invoices as security - what you are owed, you are paid. However, this service can extend a little further and encompass chasing unpaid invoices.
Every business needs to sustain its cashflow cycle.
For example - Earlypay's full service debtor finance facility will cover contacting debtors and recovering money on the company's behalf. This allows businesses to get some distance from the process, potentially preserving a relationship while also letting professionals do the work on their behalf.
Every business needs to sustain its cashflow cycle, but extenuating circumstances - anything from a market crash to an employee falling ill - can slow down this process. Business owners have an important decision to make when invoice payment periods expire without the money coming in as to how they pursue what they are owed, but no matter the conclusion, there is a way to ensure cashflow continues.
That's the advantage invoice finance offers - regardless of how relationships with clients are maintained, invoices ensure that cashflow will always be there for continued growth.
If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].