- 30 May
Collect Invoices Faster As An Alternative To Borrowing
There is a huge cash flow benefit to be acheived from collecting in your sales invoices faster, in a timely manner.
Reducing Debt Turn
The quicker you get paid by your customers, the more cash and hence working capital you will have available to your business, and therefore the less you will have to source e.g. by borrowing.
If you have an outstanding sales ledger of £100,000, and a debt turn of say 60 days (the average time to pay) every day that you reduce your average debt turn by, will release a further circa £1,667 into your available working capital.
Even if you use a cash flow finance facilities such as invoice finance, factoring or invoice discounting, there is still a significant benefit to ensuring that you are getting paid on time. Using the same example, every day you reduce your debt turn by will save you c. £50 in discount charges, if you are paying say 3%.
The majority of these kinds of cashflow finance involve a discount fee which is charged for the time that you have drawn down funding. Therefore, the quicker you collecting your invoices, to repay the funding that you have drawn down, the lower your discount charges will be.
If you undertake the credit control activity yourselves, you may be interested to read our advice article about credit control functions. However, many companies outsource this activity to specialist providers. We have clients on our book that outsource only the credit control activity for their business.
If you are struggling to collect your own invoices, even with say an invoice discounting facility - where you undertake the collection activity, there are factoring options available whereby the factoring company will assist you with the credit control activity. It is also the case that often a factoring company will be more successful in achieving a faster debt term then you may achieve undertaking the activity on your own. This is because they employ experienced professional credit controllers, and often have an established reputation as a company that needs to be paid on a timely basis.
- 15 Apr
Help Raising Sales Invoices To Customers On Credit Terms
If you are looking for help raising sales invoice to your customers, on credit terms, we have pulled together a number of useful resources that will assist you.If you need the services of someone to do this for you, please get in touch and we will put you in contact with someone that can help.Accounting software packages tend to take all of the work our of raising your sales invoices, by doing...
- 22 Mar
Selective Invoice Finance With Free Auto Dunning
Selective invoice finance is a service that we are often asked about by prospect. There are a growing number of companies offering the service, and as I have mentioned in previous posts the operational approach and pricing can differ between providers.We have regular meetings with the providers, in order to keep up to date with the structure of their products, their pricing approach etc. We had...
- 15 Feb
Saving The Annual Salary Of A Credit Controller
According to figures published by Payscale, the average salary of a UK credit controller is now almost £21K per annum, with additional bonuses and commission averaging a further £6.5K, excluding employers national insurance, and any pension contributions you have to make (currently a minimum of 2% of earnings).DISCUSS OUTSOURCING OR FACTORINGAt the top end of the pay scale, the basic salaries...
- 18 Jan
Late Payment Problem?
Battling with a late payment problem? You might feel like you are all alone by recent research from Close Brothers Invoice Finance suggests that is not the case. It suggests that many other UK SMEs are being affected by slow payments, and this has been highlighted by several sources of independent research.Their poll found that 42.8% of SMEs say that late payments are a problem for their...
- 15 Jan
Solutions To Late Payments From Customers
Late payments are still causing cash flow problems for UK SMEs.An email just received from one of our new funding partners, My Muse, was headed "48% of SMEs impacted by late payments". It goes on to quote some recent Dun & Bradstreet research that has revealed that the average amount owed in late payments has increased by almost 25% over the last year to an average of over £80K. Within this...
- 14 Dec
Costs Of Collecting Late Payments Rising According To New Research
New research from Bacs Payment Schemes Ltd (Bacs) shows that the cost of collecting late payments, due to SMEs, has more than doubled to £6.7 billion (£2.6 billion in 2017).A huge 78% of SMEs are now forced to waiting 1 month or more, beyond their standard terms, to get paid by their customers. That is a huge amount of cash tied up in unpaid receivables.40% of SMEs affected by late payments say...
- 18 Jun
Why Do Large Companies Pay Late?
I've just answered a question posed online about "why do large companies pay late?".Firstly its worth mentioning that this does not apply to all large companies. We deal with numerous financial services companies who tend to pay very quickly.There are a couple of key reasons for some large companies paying late, which are explained below. Despite there having been a tightening up on large...
- 07 Apr
Do You Know The Standard Payment Terms Your Customers Can Take?
Did you know that the standard payment terms in the UK are 30 days from the date of your invoice?Many will not be aware that if you did not specify payment terms within the contract with your customer, there are default standard credit terms that will apply to your invoice. At the current time, those are payment within 30 days of the invoice date. You can check this for yourself on the government...
- 20 Feb
Chasing Invoices Via Social Media
I noticed an interest in chasing unpaid sales invoices via social media and I thought it would be good to add something about this to our existing comprehensive credit control guide.The first question is whether this is the right channel to use or not?I think the truth is that if you have resorted to using social media such as Twitter, Facebook, LinkedIn or Google+ to chase your invoices, you...
- 17 Nov
Need Help Chasing Invoices?
Do you need help chasing your unpaid sales invoices? Our focus is often on sourcing finance for our customers, but in some cases it is a credit control service that they need, and we have plenty of options available.We have a number of providers that can offer these types of services, and using them can both speed up your debt turn, get your invoices paid and remove the need to employ your own...
- 02 Aug
Credit Control Agency
One of the credit control agencies that we work with have been able to provide some first class credit control support to one of our clients, who needed help getting their unpaid invoices collected in. The agency took over the collection of the invoices from customers and they have improved the speed with with they are paid, reducing our client's debt turn. So they have a good track record of...