Better accounts receivable funding is a great way to increase the cash flow of your business and support sales growth. While, there are several instruments available to fund receivables, you can maximize funding by optimizing the management of your trade receivables, credit terms and collection process.
To achieve this, you need to perform a complete audit of the following functions:
- Accuracy of invoicing
- Speed to issue invoices
- Payment terms
- Payment instruments available to customers
- Monitoring of the financial condition of key customers
- Management of the credit risk of key accounts
- Accuracy and frequency of accounts receivable reporting
- Collection policies and process
- Process to ensure quick deposit of customer payments
By improving the overall management of trade receivables you will improve cash flow, reduce credit losses and increase the bottom line. In addition, you can increase the level of accounts receivable funding as well as :
- Reduce the cost of existing funding
- Reduce financing costs
- Improve administrative and accounting efficiency
- Better adapt to the global short-term funding requirements of your business and support its growth
Once an audit of your accounts receivable management practices is completed, you are in a better position to look for accounts receivable funding solutions and determine how they can meet the needs of your business. The most common financing solutions are working capital loans through financial institutions, private business funding, accounts receivable factoring and export development lending from governments.
There are other ways, you can maximize the cash flow potential of your trade receivables. Let's do an overview of the most important ones, some of these may surprise you!
1) Accept Checks By Phone and By Fax
You do not need to wait for checks to come in the mail. All you need is an electronic check processing software to enable you to quickly and easily accept payments over the phone or by fax. It is a very simple way to speed up collection and deposit of the funds in your bank account.
2) Accept Checks Online Through Internet
Your business can accept checks on the web and get quick verification of account status. All you need is an information capture and processing service that allows customers to pay your invoices over the Internet by check without the need to actually mail it and for you to physically deposit it in your bank account.
3) Accounts Receivable Conversion
Accounts Receivable Conversion (ARC) is a processing service converting paper checks, into electronic documents. The check is converted into an Electronic Funds Transfer (EFT), and processed through the Automated Clearing House. ARC cuts into the time consuming cycle of processing paper checks, physical deposit at the bank as well as data entry. In most instances, checks submitted electronically are processed at the bank much quicker than paper instruments, allowing you quicker access to funds.
4) Electronic Funds Transfer (EFT)
By accepting EFT payments, your business can reduce collection time and speed up the deposit of funds in your bank account. You can also more easily accept recurring transactions and simplify the life of your customers.
As you can see from the above, creative accounts receivable funding solutions do exist to help your business. For more information on ways to get accounts receivable funding and improve the cash flow of your business, please visit Creative Cash Solutions Inc., by clicking here.
