The Commercial Finance Group is a leader in customized lending solutions for small to medium-sized companies in the B2B sector. For over 40 years, the experienced financing professionals on our nationwide team have helped companies get through their cash flow problems and build a bridge to long-term bankability through unique financial products.
When discussing our factoring finance services, we often focus on the fact that this alternative to a loan will benefit your business by instantly creating working capital without increasing your debt on the balance sheet.
This is a very attractive options for B2B companies who need access to cash quickly, but don’t want to put themselves in a situation where they may risk violating the terms of other existing loan agreements.
However, accessing working capital without increasing debt is only one benefit of factoring. When you choose to work with The Commercial Finance Group in Burbank to solve cash flow problems in this way, you also gain access to complete accounts receivable management services that can greatly reduce the burden these unpaid invoices place on your staff.
Keep reading to learn more about how choosing CFG as your factor can help to relieve many time-consuming tasks in your business. Then start the process by filling out our online application today!
Accounts Receivable Management Is Deceptively Time Consuming
So why is it that so many B2B companies are relieved to learn that our factoring services come with accounts receivable management? Because dealing with A/R is a major headache for many small to mid-sized companies.
Let’s say you complete a project and issue an invoice for payment to the customer. It takes a few days to land on the desk of the person in charge of payment. Upon seeing that you offer Net 30, 60, or 90 payment terms, they shuffle it to the bottom of their pile of invoices and promptly forget about it.
A month later, you expect to be able to process the completed payment, but there’s no check or credit card transaction to process. You attempt to call the customer to remind them, but the accountant is out of the office. You wait a few days, and call again. This time, they’re out to lunch. A week later, you send an email, with a friendly reminder that the invoice is still isn’t paid. No reply. Three days after that, you send a not-so-friendly email with the overdue notice in GIANT RED FONT. This one gets a reply, but it’s just a boilerplate stating the bill is still in the midst of processing by their accounting department. Two weeks later you issue a written letter threatening official collections, and three days after that, the payment finally lands in your bank account.
That’s a lot of worry, stress, and failed communication attempts…and this is just one customer. Now imagine that your A/R department has a dozen more of these troublesome customers or more!
Now you can see why many B2B companies dedicated at least one full time person, maybe more, to this time-consuming task.
Essential Aspects Of A/R Management
Every business chooses their own A/R management strategy, but the successful ones all contain these essential elements.
Designing Sales And Credit Terms
Some clients, like the ones described above, just don’t pay on time because they’re careless or because they don’t have the money for a service that has already been delivered, and they’re trying to dodge you.
In some cases, however, B2B companies will extend net 30, 60, or 90 payment agreements to customers whose loyalty is important for the long-term health of the business. This can be a smart strategy but only if you have the means to assess a client’s creditworthiness and credit risk profile before you let them “borrow” money for this period of time.
The Collections Process
This is the part of A/R management most B2B companies consider to be the most time-consuming and frustrating. “The A/R department is responsible for keeping abreast of all communication, documentations, bookkeeping, and pertinent matters concerning collecting payments,” explains HowTheMarketWorks.com.
Dealing With Delinquent Accounts
But what happens when they don’t pay on time? Then documentation must be kept of all collection attempts, with an escalation for each day, week, or month overdue the invoice becomes. Many accounting professionals are not trained in the art of collections over the phone, especially when dealing with people who are upset and/or clearly trying to avoid paying an amount they owe.
Factoring Offers Unexpected Perks For Small Businesses
Choosing factoring as an alternative lending solution can solve two problems at the same time for many B2B companies. First, you turn unpaid invoice into cash almost instantly. This working capital can then be put to work immediately in your business, paying salaries, covering supplier costs, financing new equipment purchases, and even simply paying rent on your office or warehouse space. Second, you’re able to turn accounts receivable over to the capable hands of our collections professionals who have the time and experience necessary to get them paid in full.
If you feel that factoring could be of benefit to your company in these ways, please don’t hesitate to contact The Commercial Finance Group in Burbank. We’ve helped companies all over the country to have peace of mind (and more money in their pocket) and we can do the same for you. Call now or fill out our online application today!
