If you have a small to mid-size business, it is highly likely that you suffer from business cash flow concerns. A steady cash flow not only keeps your business solvent, but it also enables you to grow your business because you lack working capital. The most common factor in lack of working capital is offering payment terms to your customers.
One of the most frequent negotiating terms for new customers is the amount of time they have to pay you for your products or services. A small business owner will accept the payback terms of 30, 45, or even 60 days to get the business. However, you are expected to deliver your products or services immediately and wait for your payment for up to 60 days.
It doesn''t take long to have a great amount of your money tied up in unpaid invoices if you offer payment terms to your customers. It is very possible to have more money in accounts receivables than in cash in the bank. Eventually you will hit a wall. You won''t be able to o ffer any more product or services until your unpaid invoices are paid. You won''t be able to make payroll or pay your suppliers.
Your unpaid invoices can be an asset. How? They can be turned into needed funds through invoice factoring, also known as invoice financing and invoice discounting. What is invoice factoring?
For example, if one of you customers is a very reputable company such as BT and they owe you
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