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There are two essentials to make your business work: Sales and getting paid on time for your product or service. Nothing happens in your business until you, or your sales people make a sale-you need money to make your payroll each week. But the one fact most people overlook, is the ability to get paid as fast as possible once your make the sale. You might need accounts receivable financing to get your money to finance your day-to-day operations of your business. What is accounts receivable financing? This is also called factoring your accounts receivable, and your have a financial company, most often,a bank, and when you make sales on credit for this month and let say, these are $500,000 you send copies of the invoices to prove these are valid sales, and then once a month, or every other week, your bank will sent you the $500,000 to your bank account so you can use this money for your company's daily operation. This money must be paid back to the Bank within 30-60 days, depending on your agreement terms. The bank will charge you finance charges each month, to in essence for paying you early for your accounts receivable. I will now give you some tips to use, to make this relationship work for you and your partner the bank. Tip #One: Your bank will be happy, as long as your customers pay their invoices when they are due. So they can get paid from you. Let's say your have a customer the ABC Company, makes a purchase of $75,000.00 for a computer system from you. Now it has been 60 days since you billed the customer, and you called and called, and ABC Company is complaining about the software and other problems. It will be up to you, to get the problem solved, and get back paid asap. Never use bogus invoices for non-sales, the bank will terminated you agreement, and it will be more difficult to find another bank to do business with you in the future. Tip #2: Make certain your have a good collector in your accounting department who can spot problem situations, whereby customers find problems with products or services, and refuse to pay until these issues are solved. The collector must quickly get the technical people involved to solve the problems right away, so your bank will be happy with the steady payments of your Accounts Receivable. Notice I said your accounts receivable, because you are still involved in getting things squared away, so your money is paid. Tip #3: Make certain that you continue to adequate credit reviews for all new customers, and monitor existing customers for paying slow. Too often when business drops a bit, the sales people push very hard, and new customers can be accepted, and given a high credit line, and collection becomes difficult, and your bank becomes unhappy. Tip #4: If you have a problem with Accounts Receivable collection, and a large invoice is going over 45 days, and you finally get an answer, that they will pay it next week, let the bank know about it. Never leave the bank in the dark on issues of older invoices unpaid. Find the issue, resolve it, get it paid. Tip #5: Accounts receivable financing means you have a bank which is helping you with your financing your business, strive for a good relationship, which grows into a WIN/WIN situation for both parties. You need the bank, and the bank, needs you.

Learn more about this author, William Bond.
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