Bibby Financial Services
WE BELIEVE IN YOUR BUSINESS
ASSET BASED LENDING • FACTORING • TRANSPORTATION F INANCE
GET PAID ON TIME
HOW TO PROTECT YOUR
BUSINESS AGAINST
LATE PAYMENTS
In the US, small and medium size enterprises (SMEs) are owed millions of dollars in unpaid money and many have lost track of
exactly how much they are owed. Late payments cause a ripple effect throughout the supply chain and as consequence of not
being paid on time, many businesses have to delay payments to their own suppliers. A recent survey shows that 94% of American
businesses experience late payment by their customers and nearly half of all invoices were paid past the due date.1
Larger corporations often stretch out payment terms, which can mean weeks, months, or even longer before their suppliers get paid.
If you are a small or medium size company, waiting to get paid can make it hard to cover costs and keep your business moving. In
this quick 2-minute read, you’ll learn ways to protect your business against late payments.
Businesses need capital to run day to day operations and unpaid invoices can stall the entrepreneurial engine. When your cash flow
is tied up in the outstanding invoices for the goods and services you’ve already provided, it can affect your business and its growth:
You may accrue late payment fees and endanger contracts if you are unable to pay your suppliers on time
You may not be able to take advantage of discounts by paying your vendors and contractors early
You may encounter challenges paying your employees on time
In addition to hindering business development, at worst, late customer payments can break a business.
THE IMPACT OF LATE PAYMENTS
THE COST OF UNPAID INVOICES TO SMALL AND MEDIUM SIZE BUSINESSES
American businesses
are paid on average
34 days late 1
1 Atradius Payment Practices Barometer – The Americas, September 2016
THE 3 CLASSIC OPTIONS FOR DEALING WITH LATE PAYMENTS
THERE ARE ALTERNATIVES THAT CAN BE THE RIGHT SOLUTION FOR
YOUR BUSINESS – THE FACTORING FACTS
Offer Prompt Payment Incentives
Although this may not work for every
business model, payment incentives can
sometimes encourage customers to pay
more quickly. You could offer an early
payment incentive, giving customers a
discount on their invoices if they pay
promptly or if they pay within a few days of
receiving an invoice. However you structure
payment incentives, make sure it works for
your business instead of just becoming an
additional discount for those customers
who pay on time anyway.
Charge Interest on Late Payments
All business owners know what happens
when you charge interest on late payments;
it’s essentially like a loan to your customers
that you are still no closer to collecting on.
By negotiating these terms in advance,
you can dis-incentivize your customers
from paying late to avoid the additional
fees or charges. Late fees can help offset
the damage done to your cash flow, but it
doesn’t resolve the immediate challenge
you’ll have in finding the money to tie you
over until the customer finally pays. As a
business claiming interest and pursuing
clients for late payments, puts you in
an uncomfortable position that does
more damage than good to your client
relationship which could result in less
business or fewer orders over time.
Get a Line of Credit from a Bank
Even though you’re waiting for your
customers to pay, business doesn’t stop.
You need to keep moving and keep your
employees working and you need cash
to do it. A line of credit from a traditional
financial institution like your bank, which
comes with interest on the funds and
sometimes an annual fee, can provide
the needed emergency cash to keep your
business funded in uneasy times. However,
getting a line of credit from a bank can
be difficult and time consuming or even
impossible for new businesses. If you don’t
already have strong cash flow, assets and
a great credit score, banks typically deny
businesses that are not in this
well-established position.
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Focus on running your business, not on chasing payments
Factoring or accounts receivable financing is an alternative option
for dealing with late payments and keeping your cash flow as
healthy as possible. With factoring, you get paid right away for your
invoices by your financial services company which then collects
payment from your clients, you’ll have more control over your
business’ finances because of the reporting provided which allows
you to clearly focus on running and developing your business.
Prepare for Upcoming Demand
Getting paid early will provide the capital your business needs to
negotiate discounts with your suppliers and allows you to take on
larger orders as you are able to source and pay for the materials
you require. For businesses experiencing fast growth or an increase
in demand, factoring is a source of additional funding to meet
business needs. business or fewer orders over time.
Funding adapts to your business
In the US, factoring is an often overlooked, but good funding
solution for new and growing companies or those experiencing
seasonal demand, as the amount of funding grows and adapts with
sales. Factoring improves cash flow and frees up management time
to focus on running and developing the business. And with the right
lender, you can get the capital you need when you need it, with no
minimum fees and no long-term contracts.
WE BELIEVE IN YOUR BUSINESS
ASSET BASED LENDING • FACTORING • TRANSPORTATION F INANCE
CALL US 678-210-7464 VISIT BIBBYUSA.COM
OUR PRODUCTS AND SERVICES
We help businesses unlock the working capital they require to meet their needs, including cash flow funding, new equipment
purchase, growth and expansion, refinancing, corporate restructuring and mergers and acquisitions.
Our range of financing options include:
FUND YOUR BUSINESS NOW - CALL OUR EXPERT TEAM OR VISIT OUR WEBSITE TODAY.
Factoring
PO Finance
Transportation Finance
Equipment Finance
Asset Based Lending:
- Accounts Receivable
- Inventory
- Machinery and Equipment
- Real Estate
