Repeat customer business, especially through a signed contract, gives you reliable income while you expand your company and take on new challenges. You can maintain your customer relationships and ensure their loyalty many ways, including extending credit to them. Programs for customers such as offering payment terms will result in a short period of low cash flow. However, working with a receivable factoring company can help you offer this benefit to your customers and maintain cash flow.
Managing Customer Benefits and Low Cash Flow
Extending credit to your clients allows them to purchase your goods or services and pay later. This creates loyalty due to the convenience to your customers and the relationship you are cultivating through the arrangement. This is an excellent way to plan for increased sales and improved earnings, but there will be an initial period of low cash flow until the customer pays off the debt. Depending on the details of the credit arrangement, this could be much longer than your normal invoice due dates; putting payment out 15, 30, or 60 days.
If you are concerned about the initial effect on cash flow, your business can still set up a beneficial credit program for clients. You can use your current open invoices to bolster your cash levels through accounts receivable factoring. Factoring companies like Universal Funding, provide you with cash for your invoices through a simple process:
- The factor will examine the customers associated with your open invoices and your business.
- Approval usually is completed within two working days.
- The factoring company will purchase the value of your open invoices.
- Your business will receive the cash within hours of approval and account set up.
Factoring gets you cash faster than your invoices are due, maintaining your cash levels until your customer credit program payments begin to come through.
Invest in a Credit Program for Your Customers
Extending credit to your customers is a benefit to them, and an investment for your business. Credit programs create loyalty and allow customers to purchase more of your goods or services. Universal Funding can help you minimize the negative affect on cash flow so that you can offer your customers credit. Simply fill out our online rate form today to request a no-cost consultation.