Though you very well may be familiar with the many nuances of the accounts receivable process, you might be surprised to find out that they are a few things that you didn’t know. The Commercial Finance Group specializes in accounts receivable and cash flow solutions, including factoring services and asset-based loans. Some aspects of receivables financing that The Commercial Finance Group covers at our Atlanta, Burbank and Los Angeles locations include small business loans, commercial loans, and overall cash flow optimization.
In our efforts to spice up what is otherwise perceived as a bland topic related to financial matters, our post today looks at some interesting and noteworthy points of accounts receivable financing. Hey, you may even learn a thing or two! Check out what we have to say about accounts receivable financing.
Using Credit is Easier Than Cash
Almost always, running a cash-only business, though seemingly an attractive option for certain business owners, can actually be an accounts receivable nightmare. Why? This is because it involves things like daily cash sheets, sales receipts journals, petty cash funds and heavy dependence on bank reconciliations for proper accounting.
Even with potential fees considered, accepting credit cards and other forms of digital payments can and will bring tremendous value to streamlining your accounts receivable and reporting processes. With negotiated terms and discounts considered, the benefits of accepting card payments will make it a worthy payment option.
Brace Hard for Late Payments
In nearly any and every business vertical, your customers will not pay their bills on time. In fact, RocketLawyer.com estimates that around 43 percent of small businesses have customers who are more than 90 days late on payments. Nothing puts a beating on the cash flow of small businesses quite like late payments.
The Commercial Finance Group advises not to be surprised when late payments occur because they are so common. Rather, prepare and adjust your cash flow to compensate for these late payments. Late payments are a huge reason as to why The Commercial Finance Group’s accounts receivable financing services exist, so don’t be afraid to reach out to us when you need help the most.
Audit Preparedness
At some point or another, your business will likely be audited by the IRS or another governing entity related to financial or business matters. As a result, you will have to know the full scope of your accounts receivable assets. On top of that, it’s also your responsibility to know about incoming revenue from 30, 60, or even 90 days out.
AR to Gain Collateral
In terms of obtaining a business loan, most businesses can actually use accounts receivable services as a function of collateral. Essentially, if you fail to repay a loan, the lender can claim the pledged receivable to recover its loss. When you pledge accounts receivable as collateral, the manner in which you report your accounts receivable balance on your financial statements remains unchanged. However, you must provide additional disclosures to gain said collateral.
Be Green – Eliminate Paper Billing
As the planet moves further toward environmental sustainability and eco-consciousness, it would probably look really good to your clients or your customers if you send out an e-bill instead of a paper bill. After all, ‘snail mail’ is slow and sometimes unreliable. At least with green billing, you can rely on the lightning-fast internet to communicate any billing needs to your customers or clients. For some industries, e-billing is actually required. Overall, e-billing is very environmentally-friendly, cost-effective for your businesses, and more efficient. Everyone wins!
Automate Payments
When you’re an extremely busy business owner, it can be really nice to put certain things on autopilot, including payments. That’s why it’s a good idea to automate your accounts receivable processes with the help of The Commercial Finance Group. This way, the incoming payments that you receive will be streamlined, and that will be one less thing for you to worry about. Payment automation can also be a green process because you’ll be reducing paper use.
Meet Your End-to-Ends
For most businesses, the account receivable needs are most likely closely matched or related to accounts payable needs. It would be very efficient if both sides of account financing are managed and streamlined by a single organization, such as that of The Commercial Finance Group. For small businesses, it is especially beneficial to outsource your account financing functions, because over time and with the increase of sales and revenue, the internal management of accounts receivable and accounts payable becomes more and more difficult and complicated. Our accounts receivable financing services are here for you!
Consider Incentives for Payment
Though we shouldn’t always get a reward just for doing something that’s one of our responsibilities, offering rewards or incentives for timely payments from customers, clients and vendors can make your overall account financing matters a little bit easier. For example, you could offer a small but considerable discount for future orders if their invoice is paid by a certain date. If you’re struggling with consistent late payments, give a reward or incentive a try.
Maintain Organized Reports
Accounts receivable and accounts payable reports, regardless of which software platform they’re kept on, provide accurate, computerized information that should help steer future business decisions when it comes to your overall cash flow.
Most reporting tools generally aid in the credit management and collections processes. Additionally, most finance reporting tools have an ‘open receivables report’ and ‘aged trial balance’ function, which can be restricted to disputed invoices only for customers who are over their credit limit.
A few more tools that are generally used with finance reporting programs include a sales history report and a function to view and print a ledgercard. The sales history report gives a quick snapshot of sales, cost, and gross margin per customer, and the ledgercard will enable you to easily resolve customer account issues.
At The Commercial Finance Group, we not only aim our efforts at providing you with the best cash flow management solutions and accounts receivable financing possible, but we also strive to make our business vertical interesting and engaging with our clients. If you have any questions about accounts receivable financing and want to know more information, contact us today.
