Getting Paid Quickly Is A Top Priority

According to Atradius, 48.8% of all B2B invoices last year were paid late. In their 2017 Perceptions Study, Receivable Savvy interviewed 470 supplier-side finance, accounting and accounts receivable professionals from small, medium and large companies, to gather information about practices and preferences of suppliers in relation to invoicing, payment, early payment, collections and cash applications. Not surprisingly, getting paid faster was identified as the most important issue for suppliers when invoicing customers. Over 90% percent of survey participants stated that getting paid faster was their top priority, up from 83% in the 2015 study. The study also found that 48% of those surveyed would accept early payment of an invoice in exchange for a small discount, while 40% were unsure and only 12% said they would not accept an early payment discount.  
 
So if getting paid faster is a top priority for your company, here are seven things you can do to speed up invoice payments:  
  1. Submit invoices electronically and immediately upon delivering the goods or services.
  2. Clearly state payment terms on all contracts and invoices.
  3. Offer discounts for early payment.
  4. Reduce payment terms from 90 days to 60 days or from 60 days to 30 days.
  5. Call customers after sending invoices to confirm receipt and highlight payment terms.
  6. Accept multiple payment options including cheques, EFT, ACH, e-transfers and credit cards.
  7. Have clearly defined credit policies including conducting credit checks on customers before offering credit terms, implementing late payment fees, refusing new orders from late paying customers and implementing a COD policy for late payers.
 

Create Predictable Cash Flow

Unfortunately, regardless of payment terms, policies and practices, many small and medium-sized businesses are at the mercy of their larger buyers for payment. Waiting for payments can crush otherwise strong companies and hinder their ability to grow and take on more business. So when these tactics have not produced the kind of cash conversion you need, Invoice Factoring can a simple, inexpensive option for immediately converting outstanding invoices to cash. Invoice Factoring is in many ways similar to offering an early payment discount. However, unlike offering an early payment discount to your customers, with EBF’s Invoice Factoring, you are not dependent upon your buyer accepting your early pay offer nor are you at risk of your buyer taking the discount and still not paying within the agreed upon terms.  
 
With Invoice Factoring, you sell your invoices to EBF at a discount off the face value, often at a rate less than the typical 2% in 10/Net 30 offered directly to your customers for early payment. The difference being you decide which invoices to factor, and when, to meet your cash flow needs, versus being dependent upon your customers accepting your early pay offer. You also never have to worry about “discount creep” where customers take your early pay discount, but slowly, days outstanding creep back up, while they continue to take the discount. And with EBF’s confidential, non-notification factoring option, there is no need for your customers to be aware that you are factoring their invoices.  
 
For more details and to discuss options, please contact Anne MacRae, Vice President, Business Development, at Express Business Funding at 416-887-7963 or anne@ebf.ca.