Don't let late payments hurt your business

Don’t Let Late Payments Hurt Your Business

Take control of your cash flow so that customers’ late payments don’t have the ability to slow or stall your business.

Is money stuck in your accounts receivable due to late payments slowing down your business?

Finance news site reports that on any given day in the US, B2B companies are sitting on as much as $3.1T (yes, TRILLION!) in accounts receivables. Larger companies have two advantages when it comes to slow-paying customers than their SMB (small and mid-size business) competitors do.

Amount tied up in unpaid customer invoices every day

  1. Relationship Power

Big companies are often the “power” player in the relationship, in the position of dictating payment terms to their customers. Conversely, SMB’s may have to play by the rules of their customers and may not feel as though they want to risk damaging a relationship by hounding a customer for payment.

  1. Financial Power

Large companies generally have deeper financial reserves than their smaller counterparts. Late payments from customers can make it difficult for small and mid-sized businesses to make payroll or meet other financial obligations, such as taxes, lease and mortgage payments, operating expenses, marketing and advertising, taking on new customers or bigger accounts, and so on.

SMBs with late payments also pay their own suppliers late

In fact, a PYMNTS study found that 28 percent of businesses impacted by late payments from their customers also then end up paying their own suppliers late.

Are you running your business or is slow cash flow calling the shots?

An article lists signs that indicate slow cash flow is stalling or stopping business growth and operations, ultimately resulting in a lack of liquidity – insufficient on-hand working capital needed to meet payroll, expenses and other operational costs. Two of these symptoms go directly to the heart of outstanding customer invoices:

  • Late payments – overdue invoices
  • Slow collections

When money isn’t coming in as scheduled because of late payments from customers, your ability to meet payroll and cover your own business expenses is hampered. Even if you are scraping by on expenses, you may be unable to take actions to grow your business, such as taking on bigger accounts or new customers while you are waiting for customers to submit payments on jobs you have already completed.

If your business struggles – occasionally or frequently – to meet expenses or lacks working capital needed to grow, slow cash flow is negatively impacting your operations and limiting your control. You can take control of your cash flow by expediting cash flow, whether or not you eliminate the challenge of slow-paying customers.

4 Ways to Speed Up Slow B2B Cash Flow Caused by Late Payments

1. Factor invoices

You can completely eliminate the challenge of late payments by customers by factoring invoices as soon as the first day they are created by factoring them with Corsa Finance. Factoring also benefits your customers in that they can still enjoy generous payment terms and can further protect your company from risk of bad debt if you choose non-recourse factoring.

2. Offer fast-pay discounts

You probably have vendors that offer quick-pay or cash discounts, giving you a price break or account credit if you pay immediately instead of on terms. One thing to consider before offering a quick-pay discount like this to your customers is whether the discount you’re offering would be more than the cost to factor the invoice. If your factoring fee would be lower than the amount you give back in a discount, then factoring could be the smarter financial choice. Your business still gets paid right away and you aren’t leaving as much money on the table.

3. Require large deposits

One of the consequences of invoicing customers on terms after a job has been completed is that your business is often required to pay for supplies, equipment, employees and other expenses long before the revenue attached to that job has been received. If customers are required to put down a deposit, some of that revenue can be matched up to corresponding expenses. However, this doesn’t completely eliminate the issue of the balance of the invoice coming in slowly or late.

4. Invoice in real time

Use technology to generate invoices in real time as soon as a customer has signed off on a job or one of your employees has indicated its completion. Waiting a day or even a few days to invoice customers means days in addition to the length of their payment terms before revenue will come in.

What would you be able to pay for today if you weren’t waiting on customer payments or commissions owed to you?

  • Federal or state taxes
  • Taking on new clients or bigger accounts
  • Business credit card or loan payments
  • Marketing, advertising and other promotions
  • Automobile repairs, gas or maintenance
  • Lease, rent or desk fees
  • Employee or contractor wages
  • Supplies and expenses

Call 866-855-6772 or by email using the form below to find out how we can help you take control of your cash flow to keep your business on a better financial footing.

  • Average monthly sales or amount of invoice to factor
Invoice Factoring Means Improved Cash Flow

Invoice Factoring Means Improved Cash Flow

How does invoice factoring affect cash flow?

There are very few forms of business finance that have been around as long as factoring, and yet invoice factoring (also known as invoice discounting, A/R factoring or receivables financing) is not part of the common business lexicon for most B2B small business owners in the U.S.

Invoice factoring is a centuries-old business financing tool that originated when bankers would provide manufacturers with an advance on goods so that manufacturers did not have to wait for products to travel to far-away lands before taking on new business.

According to Wikipedia: “Factoring is a financial transaction whereby a business sells its accounts receivable (i.e., invoices) to a third party – called a Factor – at a discount.”

The idea of invoice factoring might seem complicated, but it’s actually very simple. Accounts receivable are assets since they represent money that will – eventually – flow into an organization and which they can then reinvest in growing their business. Organizations choose to factor invoices with a company like Corsa Finance, instead of waiting for customers to pay, in order to expedite organizational cash flow.

How the process works to improve cash flow:

The biggest reason companies choose to factor invoices with a company like Corsa Finance is to unlock working capital tied up in invoices in order to expedite organizational cash flow. Companies that factor invoices with us receive same and next-day advances on invoices factored with us for a small fee called a factoring fee.

Expediting cash flow by factoring invoices can speed up business growth.

Sometimes businesses that invoice their customers wait weeks or even months to receive payment for invoices. So while they have assets on the books in the form of money owed to them via accounts receivable, they don’t actually have the ability to use that money to grow their business until the invoices have been paid.

Organizations that factor invoices with Corsa Finance pay just a small percentage to get access to 90% or more of the working capital that would otherwise be tied up in their accounts receivable on the same or next business day the invoice is factored.

That means that they have access to the working capital needed to meet payroll, fill the next customer’s order or money needed to take on bigger customers and larger orders, purchase equipment, expand inventory or services or execute other business growth strategies while we wait for the invoice to be paid, instead.

Apply or request a quick quote – either way, there is no cost, risk or obligation. Find out how much working capital your organization could unlock by leveraging your accounts receivables as an asset.

What type of organizations factor with us?

While most business owners in the U.S. are familiar with other types of business financing (such as bank business loans, small business loans, private investors or angel investors, etc.), invoice factoring is not a term many are familiar with outside of a few industries where factoring invoices is an every-day practice.

The team at Corsa Finance has decades of business financing experience with clients in a variety of industries; providing:

  • Temporary employer and staffing agency factoring
  • Factoring for specialty staffing agencies like nurse staffing, IT staffing and security services
  • Supply chain factoring for manufacturers and distributors
  • Factoring for landscapers and other local residential and commercial service contractors
  • Contractors and businesses serving the energy and utility industries
  • Factoring for manufacturers who sell through 3rd party e-commerce sites like Zulily and Amazon – and more

We work with factoring clients directly, but we also invite brokers to find out more about the benefits of working with us. Our commissions are competitive, and we pride ourselves on the high level of customer service we offer.

If you want to find out more about invoice factoring or find out whether it’s an appropriate business financing solution for your organization, contact us at 855-882-6772 or fill out our online application. We will process your application and provide you with a factoring proposal at no cost and no obligation.

Why Choose Corsa Finance for Invoice Factoring?

Organizations approved to factor invoices with us can receive funding as early as the same or the next business day. Approvals are fast and our rates are competitive. We offer non-recourse factoring, factoring with recourse and non-notification factoring, giving you more options to choose what is best for your business.

We don’t tack on additional fees.  Add-on and administrative fees can significantly increase the real cost of factoring. When you factor with us there are no hidden fees:

  • No application fees
  • No notification fees
  • No due diligence fees
  • No credit check fees
  • No reserve release fees

We want to earn your business as an invoice factoring client, so unlike many other factoring companies, we don’t require customers to commit to long-term contracts nor do we impose requirements like monthly minimums. In addition, we pride ourselves on our personal approach and the care we take with our customer relationships.

  • Average monthly sales or amount of invoice to factor
e-Commerce Vendors Speed Up 3rd Party Payments by Factoring

e-Commerce Vendors Speed Up 3rd Party Payments by Factoring

Vendors that sell through Zulily, Amazon and other third party ecommerce sites may find themselves waiting 60-90 days for payment. Factoring speeds up cash flow by eliminating the wait on customer payments.

Invoice Factoring Speeds Up Payments for Zulily and Amazon Vendors

In 2016, Zulily announced that payment terms to vendors were being extended. Instead of net 30 terms, vendors selling through the ecommerce site now wait 60 days or even longer to get paid. For some vendors, waiting eight weeks (or even longer) from the time an invoice is issued or payment is accrued is a minor inconvenience; for others, it could be mission critical. When money is tied up in receivables and earned ecommerce payments and commissions, vendors may miss out on other opportunities to grow.

This is what’s known as “opportunity cost.” In other words, when a business decision to work with a 3rd party e-commerce platform like Zulily or Amazon means that a vendor must wait for payment before taking on other customers or bigger orders, this is the opportunity cost of that business choice. Factoring speeds up cash flow.  Invoice factoring is a financial tool that gives Zulily and Amazon vendors immediate access to the money owed to them by these e-commerce platforms (and other customers).

When a vendor factors a future payment or a customer invoice with Corsa Finance, they can receive a large percentage (as high as 93%) of the amount owed to them on the same day a customer invoice or e-commerce sales report is generated.  With low factoring fees, vendors that use factoring to reinvest in growth more quickly have the ability to generate more sales and also free up working capital to meet operating expenses and take advantage of supplier quick-pay discounts.

For Zulily and Amazon vendors, when factoring speeds up cash flow it could fast-track growth.

As a vendor, if you cannot replenish the inventory of raw materials needed to meet sales projects for future months because you must wait 60-90 days for an e-commerce platform payment to arrive, you could see sales slow or even stall. By ensuring that your cash flow is keeping pace with operating costs like inventory and payroll, you give your business the ability to increase production and maintain growth momentum.

Factoring is an ideal supply chain finance tool in that it allows manufacturers, distributors and other vendors the ability to leverage working capital that is technically on the books as an asset but would not be otherwise available to use.

Factoring speeds up cash flow, giving vendors immediate access to payments owed by customers, including third party e-commerce sites like Amazon, Zulily and similar platforms. Vendors who factor invoices can reinvest in their organizations more quickly and focus on growing their businesses instead of waiting on payments or chasing down customer invoices. Factoring even helps reduce organizational overhead by reducing the time and money that must be spent on accounts receivable activities.

We would be happy to provide you with more information about ecommerce invoice factoring and how it can help vendors speed up the payment cycle by eliminating the time between e-commerce sales and third party payments.

Request a free, no-obligation quote for financing by applying online and get answers to your questions in 24-48 hours, or even faster.