|HOME | ATTORNEYS | DIRECTIONS | CONTACT US ||
McGunagle, Reidy & Hentz, Ltd.
2088 Broad Street, Cranston, RI 02905-3342
PH: 401.941.2088 - FAX: 401.941.0017
A Business Lawyer In New Orlean Business Law And Operation Tips Business Law Attorneys Business Law and Commercial Solicitors Business Law and Law Firm Business Laws Basics Business Laws For Small Businesses Business Laws Unveiled Business Litigation Commercial Law Payment Commercial Loan Modification Success Tips Commercial Refinancing Commercial Transactions Gone Bad Commercial Transactions Money Laundering Company Law Services Company and Business Laws Differences Between Family Solicitors Direct Commercial Funding Review Employment Law Florida Real Estate Lawyers History Of Business Law Degree How Can Attorney Help You How To Choose LLM Business How To Finance YourBusiness How To Get Investment Money How to Make Commercial Transactions Immigration and Business Law Important Facts About Commercial Mortgages Important Points to Know Intercompany Business Transactions And Relationships International Commercial Arbitration - Law Late payments in commercial transactions Laws Surrounding Online Pharmacy Business Legal For Trade Scale Managing Business Law Ntep Scale Assurance Of Quality Role of Commercial Law Firms Salespeople Must Understand the Fundamental Principles Small Business Law and Their Issues Specialists Navigating the Legal Minefields Startup Law 101 The Best Business Law Books The Law Of Attraction The Necessity of Business Law Things You Should Consider Listing US Commercial Mortgage Basics Finance Using Your Slow Paying Invoices Walker Commercial Fundings Experience What Commercial Law Deals With What Constitutes A Breach Of Contract What Is Business Law What Is the Checklist What You Need To Know About Business What You Need to Know Where to Go For Training Why to Have a Trusted Probate Work With The Best Real Estate
Using Your Slow Paying Invoices To Finance Your CompanyOne of the more troubling by-products of the recent credit crunch is that many companies implemented immediate measures to conserve cash. One of those measures was increasing how long they take to pay invoices. In the past, most commercial transactions were paid on net 30 terms. That meant that the customer had 30 days to pay their invoice. Now, most customers are paying their invoices in 45 to 60 days. Some are taking as long as 90 days to pay. This has put small and medium sized companies at a disadvantage because few can afford to wait that long to get paid and may need to be paid sooner to be able to meet obligations.
One way to protect your company against this situation is to start building a cash cushion that can be used to cover operational expenses while waiting to be paid. Another alternative is to offer incentives, such as discounts, to customers that agree to pay quickly. Offering a 2% discount for a payment in 10 days is a common practice that can be used to enhance cash flow.
Another alternative is to use a business financing tool called factoring in order to quickly monetize your slow paying invoices. Invoice factoring involves using a financial intermediary between your company and your customer. You sell your invoice to the factoring company, who advances you funds. The factoring company then holds the invoice until maturity and settles the transaction when the customer pays in full.
Most factoring financing transactions are structured as the purchase of an invoice, which is an asset, payable in two installments. The first installment is called the advance and is about 80% of the gross value of the invoice. The second installment, called the rebate, covers the remaining 20% (less a service fee) and is paid once your customer pays the invoice in full.
An important advantage of factoring financing is that is more accessible than other forms of financing. Most factoring companies don't require that clients have substantial assets. The most important requirement is that the client must do business with credit worthy customers. This feature makes factoring an easily accessible solution for small and midsized companies.
Another important feature of factoring is that it can be deployed quickly. While most conventional business financing programs take a couple months to set up, most factoring plans can be deployed in a week or two.
One of the biggest advantages of factoring is that it can monetize slow paying invoices. This makes it an ideal solution for companies that can't afford to wait up to 60 days to get paid by customers.
By: Marco Terry
McGunagle, Reidy & Hentz, Ltd.
Snap-on dentures Hampden 21211 removing my snap in dentures.
2088 Broad Street
Cranston, RI 02905
401-941-2088 | Fax 401-941-0017