Truthfully ask yourself: When was the last time you paid a bill as soon as you received it?
If your answer was anything like mine, to find out that Australian businesses are some of the slowest paying customers in the world won’t come as a shock to you. According to OmniPay Finance, Australian invoices are on average, waiting 52 days to be paid. So for recruitment agency owners that might excel at business development but struggle to manage slow paying customers, failure can be just a few missed invoices away.
This leads many agency owners to speculate as to the correct solution. Is the secret to better cash-flow employing more admin staff to keep customers more accountable, or is it to chase up those unpaid invoices yourself and work more hours? Or maybe it’s investing in better accounting technology, or engaging a debt collector? To tell the truth, every business is different and may require a different solution.
However, a common denominator I have noticed in recruitment agencies that are thriving at the moment, is that the more financially savvy agencies allow their money to work for them, by utilising the perks of invoice finance. (Invoice Finance is selling an invoice to get 85% of its value in 4 hours, with the remaining 15% released when the bill is settled, minus a small fee).
Here’s 11 compelling reasons why they use it:
In fiercely competitive industries like recruitment, survival can simply come down to having the quick cash to pounce on every growth opportunity. Not only is it about opening doors, invoice finance can be a tool for keeping your biggest and best customers happy. By adding a great selling point to your business such as offering your customers the extended payment terms they ask for, without putting yourself at risk, you can continue to foster stronger relationships with your customers. Ultimately you will be attracting more business while allowing your staff to commit to more sales and buildout opportunities while your competitors sit around waiting for their invoices to be paid.
No security over the family home, business or car.
Modern invoice funders don’t require any security other than the invoice itself, making this finance option safer than a secured line of credit or a secured overdraft. This frees up security to be used for other purposes, e.g wealth creation or investments.
Quick funds, but only when you need them.
Once you or your admin hand pick an invoice for financing and upload it to the funders secure website with just a few clicks, you can expect the funds to be in your account within 4 and 24 hours.
Most invoice funders are adapting to suit today’s impatient society and now boast an impressive approval turnaround time of 48 hours.
With invoice finance funders popping up left right and centre, the market is growing more and more competitive. Recently advance rates are between 85% and 95% of the invoice face value.
By bridging the gap between closing a deal and actually getting paid for it you are fully utilising invoice finance to steadily guide your agency through it’s natural cash-flow peaks and troughs, creating a more stable environment for growth and longevity. Not only will the business be more financially balanced, but so will your decisions. As an owner you can’t make bold and assured decisions on how best to stay relevant in todays market without solid financial backing.
You don’t matter to the funder.
Well you do, but your financial standpoint isn’t as relevant as you might think, as most invoice funders look at the strength and reliability of your customer to whom you’ve issued the invoice as the most important form of security. This makes invoice finance more than suitable for young businesses that sport customers who have a longer trading history.
Spend less on staff.
As terrible as it may sound, your accounts and admin department might not need as many staff if you’re using invoice finance. Invoice finance facilities can provide an accounts receivable service, meaning outsourcing can be cheaper than hiring and managing full time staff.
It’s not debt, nor a loan.. So what is it?
Invoice finance is not new debt and it’s definitely not a loan, it’s a simple sale and purchase of an open invoice.
A common problem with bank loans is the business might outgrow the size of the overdraft or line of credit, and to increase this may result in more valuable assets needing to be put up as security and a lengthy cumbersome re-application process may take place. However, invoice finance limits are not restricted and the advance value directly reflects the majority of the invoice value.
The better alternative to engaging a debt collector?
If you prefer timely payment for your work instead of relegating your receivables to the bad debt file, you’ll want to connect with a reputable invoice financier. At Invoice Compare we can refer you to some of the best invoice funders in Australia. All you have to do is ask, our service is free.
Call: ✆ 0422 147 345
Visit: ☛ www.invoicecompare.com
Author: Bill Sparksman – Website Link: https://www.linkedin.com/pulse/how-do-slow-payments-cause-ripple-effect-economy-bill-sparksman/?published=tRead More