When your customers take 30, 60, 90 or more days to pay your invoices, it creates a cash-flow gap and unnecessary stress for your business. Keeping up with payroll, daily operating expenses, equipment repairs and bills is a challenge. Unfortunately, many businesses are affected by this problem.
The situations below are the most common examples of why your customers are slow-paying. With each scenario, we provide a solution so that you can prevent further delay and increase your chances of faster payment.
If you still find that payment can’t come fast enough, we have a business finance solution for you. When you partner with TCI Business Capital for our invoice factoring programs, we fund you same day on the invoices you send- making your slow-paying customer problems a thing of the past.
The answer to this question is not a one-size fits all. There could be common invoicing requirements for your industry you overlooked, or perhaps it is as simple as including basic information on your invoice, such as itemized totals or PO numbers. Using a product such as QuickBooks walks you through the basics of a successful invoice format.
Of course, there could be issues that go beyond the basics. When these happen, you need to know the quickest way to improve them. Here are some of the most common problems we see surrounding slow-paying customers, and how to handle them.
In your excitement over a new customer, you might have forgotten that setup is not as simple as a handshake or a phone call. Your customer needs critical information in order to get you into their accounting system. Often, they require that you sign an agreement or complete a vendor set up packet. When it comes time to invoice, if you are lacking any required documents, this could result in delays in payment, or much worse, your customer stating that they have no legal obligation to pay you. You do not want to be stuck there.
If your customer requires a master service agreement, did you make sure that it was received and approved? Did you complete the vendor setup packet in full? It could be as simple as sending in your W-9 form. Either way, knowing what is required before you start work is crucial in order to get paid once the work is done.
At TCI Business Capital, we specialize in ensuring that you are properly set up with your customer, so that there are no surprises when it comes time to invoice. Because we know that the relationship to your customer is vital to the future of your business, we are professional and courteous in our communications. Even if this includes becoming compliant with your customer’s master service agreement, we have the expertise you need.
This one sounds simple. But in reality, it can be a challenge. Some of your customers will expect that you know how the invoice should be formatted and what information is needed. If an invoice is missing information and you have not received payment, you risk not finding out until weeks, or worse, months after you mailed your invoice. We know how to help you prevent this.
Take time to speak with accounts payable. Once you confirm what is required for payment, make sure your billing team is aware. Checking in on occasion is not a bad idea, given that some companies change billing requirements on short notice. Be proactive and save yourself the headache.
When you have a company to run, checking in can slow you down. At TCI Business Capital, our funding teams are experts in ensuring that your billing has all needed documentation. Downstream, our AR specialists are familiar with your customers’ requirements and work with you and your customer to resolve disputes quickly and smoothly.
Remember the master service agreement you signed during the setup process? Deep within the fine print, it includes not only pay terms, but also what requirements your customer has in order for you to do business with them and remain in good standing. Overlook this information and you might be in for a surprise.
Taking the time to read your agreement, and consulting legal counsel if necessary, will assist you knowing what your customer needs. Information such as the pay terms for invoices, as well as specifics on required invoice documents, helps your business be more prepared. Most importantly, you can set expectations for receiving payment.
What if you do not have the time or the resources to review these requirements? At TCI Business Capital, we specialize in assisting companies to remain compliant with their customers’ requirements. We also know that sometimes, invoice payment can be received beyond the stated terms. With our same-day fundings, your cash flow is improved over waiting an eternity to receive payment.
In some industries, it is common for pay terms to extend close to 90 days after invoicing. But if you know your industry’s pay terms and payments are slowing, this could be an indicator that your customer is going through financial stress. Not knowing your customer’s health could severely impact your cash flow when issues arise, and in the worst case, result in non-payment for services you have already completed.
There are a number of resources available for determining the financial health of your customer, starting with reviewing today’s headlines (if your customer is large), or checking out their website for their financial reporting. For current information, some companies rely on business credit reporting available through companies such as Experian and Dun & Bradstreet when deciding if a customer is financially strong enough to work for.
Credit reporting does not come cheap. At TCI Business Capital, we provide free credit risk reports on your customers, giving you the reassurance you need when making your next big decision. Our credit desk is available to provide you fast and simple decisions on your customers’ ability to pay you, and our AR management team monitors payment status to stay ahead of any issues before they arise.
When you partner with TCI Business Capital, our flexible accounts receivable financing programs allow your company to grow while maintaining smooth cash flow, with the benefit of our value-added services to stay in good standing with your slow-paying customers. This ensures that you have the cash flow you need to keep up with expenses, buy new equipment, meet payroll and much more. Plus, our set up process is simple.
Since 1994 we have we have provided cash-flow solutions to companies in many industries across North America. We bridge your cash-flow gap caused by slow-paying customers, allowing you to focus on growing your business.