Running a business is about making money. That’s why customer payment is so important.
Sure, there are other things about entrepreneurship that can bring us satisfaction. However, if we don’t pay the bills and we don’t go home with a paycheck (and provide one to every employee), we won’t be around too long.
RELATED ARTICLE: 3 STEPS TO GETTING YOUR INVOICES PAID FASTER
One of the biggest obstructions to business profitability is the timely collection of accounts receivable. Companies that are primarily in the business of doing something else may not devote enough resources to collecting customer payment. The owners might even feel they can’t really afford to spend the time or money on these activities.
What’s more, when the business is small or new, it can be risky to pressure customers too hard for payment. They might simply leave the account unpaid and take their business elsewhere.
Yet you still have to pay your bills on time. What’s the solution?
Many companies have chosen a service that assists them with customer payment. Rather than housing the billing in the company and directly contacting customers for payment, the company turns over invoices to a specialized firm that does nothing but handle payments. In exchange, this firm takes a small percentage of the invoice total.
This has proven to be very effective for trucking firms. Trucking companies have constant expenses for fuel and repairs. These expenses come due whether the load that generated them has been paid for or not. TBS Factoring handles many such accounts. This lets the trucking company—often a single truck owned by its driver—stay on the road while TBS handles the bills.
Apart from the labor savings, this process is very effective for several reasons.
Separation from the Customer
It can be very uncomfortable to badger a neighbor or friend about an unpaid invoice. Factoring takes the process out of local hands. Instead, it goes through an out-of-town firm. This keeps the interactions businesslike. Therefore, the process doesn’t seem quite so personal. Companies are able to eliminate those awkward times and still pay their bills.
Some Room to Stretch
Factoring companies pay you whether the invoice is paid or not. Consequently, any issues with collections are up to them, not you. They can stretch things a little bit so that they can pay you. And you can get on with your work. In the meantime, they go to work with second notices, phone calls, and even collection efforts if necessary. All of this takes place outside your four walls with no visible impact for you.
It’s easier than ever for companies to do invoices efficiently in-house. However, it is even easier to pass the work of customer payment along to a factoring company. Because they specialize, they’ll be up to speed on whatever new software and processes come along to help expedite payment.
Perhaps you have a one-person (or even part-time) billing department who takes months to get proficient on new software. How much better would it be, then, to have an experienced team that is quick and efficient? What’s more, they will have the most effective tools available.
Of course, factoring is just one option for getting invoices paid in a timelier fashion. Businesses can also take some other routes. For example, you could require prepayment for goods or services. Or you could add credit card payments. Additionally, you could set up automatic payments through the customer’s bank account.
Whatever option for customer payment your business chooses, make sure that it’s one that will provide the revenue your business needs to stay healthy and grow. Whether you’re hauling a load of toys or doing plumbing, you have to have on-time and accurate customer payment.