Time Is Money

In an effort to increase cash, companies tend to keep squeezing the same bloodless turnips: cutting costs, buying cheaper products and raising prices. Although these areas should not be ignored, adjustments to them tend to have marginal success and a ripple effect of other problems. Imagine however, having even one month’s receivables paid immediately and at your disposal. The cash influx could enable capital improvements, advertising, or any number of endeavors. 

Prudent companies attempt to speed their receivables thru incentives or terms (2% discount, net 30, etc.). Although some clients take advantage of such discount terms, many others don’t, or worse yet, corrupt the system causing problems for the relationship. Either way, you lose. 

There is a quicker and less expensive way to get your receivables. Factoring. Typically, you’ll receive your money within 24 hours and there is no debt – as your client pays back the factor. Accounts receivable is the one asset on your books that is not expected to turn a profit. Get it off your books, and turn it into an income producing asset. The moral of the story; Get your cash working for you, instead of working for your cash. 

Article provided by John Thompson of Advantage Factor. John may be reached at (409)755-2274. 

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