Cash flow problems often prevent businesses from paying vendors accurately and on time, which can be detrimental to a business’s health and reputation. Your team would have to spend extra time handling supplier queries, early payment discounts will be inaccessible, and in the likely event of a vendor sending follow-up invoices, you could end up making duplicate payments or pay late fees.
Not having to pay your vendors up-front is a luxury that should not be abused, unless you want to risk being unable to cover rent, payroll, and other monthly expenses. After all, the businesses that must pay vendors before they pay themselves typically struggle to keep enough cash in the bank to show that they are profitable and are therefore deemed unable to pay off any sort of debt.
The keys to avoiding these outcomes are maintaining positive cash flow and creating a solid system for making payments.
DELINQUENCY IS NO LONGER AN OPTION
If your business is losing money due to a competitive disadvantage, you’ll be pleased to learn the battle is far from over. No business’s future is sealed before exploring the world of alternative financing, where a variety of business loan programs are available for businesses that need funding fast and would benefit greatly from paying off debt on their own, customized terms.
A Merchant Cash Advance, for example, is designed for costly investments that take time to produce results, such as marketing initiatives, securing additional property, or simply embarking on a lengthy project that would otherwise tie up operational funding. Funding comes in the form of a lump sum that is paid back via an agreed upon percentage of future credit card sales. There are no fixed monthly payments, so you don’t have to worry about paying off large chunks of debt when revenue is down.
These features are particularly helpful for seasonal businesses or businesses looking to debut a series of new products. You want to purchase an excessive amount of inventory but you lack the funds to do so, and the last thing you want is to transfer your financial problems onto your vendor with a late payment. With this type funding program, you can pay your vendor on time without obstructing cash flow or struggling to pay your bills. The majority of the debt will instead be paid off when business starts to pick up, because repayment is tied to sales revenues.
LET AN EXPERT WEIGH IN
Another wise use of a Merchant Cash Advance is taking on new hires, a move that could easily put your payment problems to rest. In addition to increasing productivity, expanding your team will ensure that employees do not have to take on responsibilities that stretch outside their job description, like, say, calculating and scheduling invoice payments or negotiating with vendors. Hiring one or two employees who specialize in keeping track of orders will allow your other employees to dedicate 100% of their focus towards what they do best and ensure a good customer-supplier partnership, which can give you valuable trade credit and optimal payment terms. Failing to pay invoices on time also makes it difficult to provide accurate reports of financial standings, and these reports are crucial for cementing relationships with financial service providers and potential business partners.
Perhaps the first task of these new employees, however, is making sure invoices contain accurate information. It’s extremely common for invoices to arrive with incorrect or incomplete data, and businesses are usually too wrapped up in their usual operations to spot the error right away. Besides, without an invoice expert on hand, figuring out which invoice detail is incorrect seems like a headache that can certainly wait until the end of the month. Being able to immediately detect inaccurate invoice information will drastically reduce the time it takes your team to process invoices and increase the likelihood of future invoices containing only the right data.
TAKING INVOICES HOME WITH YOU
Invoice experts will likely be up-to-date with the most efficient methods of approving invoices, specifically accounts payable tools that work as mobile apps.These tools are meant for business owners who don’t want invoice issues to interfere with day-to-day operations, and would prefer to secure orders as soon as possible, even if this means taking their work home with them. Among the most widely-used accounts payable apps is Pyrus, which automates your workflows, turns tasks into business processes, and most importantly, offers the ability to monitor invoice from any location.
Alternative business financing companies like United Capital Source understand the importance of being able to paying vendors on time while maintaining enough capital to stabilize and grow your business. If you know what your business needs to do to in order to access its full potential, a business funding expert will be happy to guide you through the process and find the perfect program for you. With a clear plan for expansion and the cash flow to back it up, your business will gradually manage itself into a prosperous position for many years to come.