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Making Late Payments can Hurt Your Business –

Accounts Receivable Finance can help!

Small businesses that don’t pay their bills on time can see a negative hit to their bottom line along with encountering several other adverse effects that can hurt their business. According to the Dun and Bradstreet Quarterly U.S. Industry Delinquency and Failures Report for Q3 2018, the number of companies that are not paying their bills on time was on the rise throughout 2018.  The good news for many small and medium-sized businesses is that accounts receivable finance can help eliminate the uncertainty of when you will be paid allowing you to get the funds you need to cover your expenses before your payments are delinquent.

How making late payments can hurt your business

Negatively impact your credit score
Since your business’s credit score helps other businesses assess their financial risk associated with working with you, it can be essential for your business to have a good credit score. One of the critical factors that credit bureaus use in determining your business credit score is when you have paid creditors in the past. Often for each late payment that your business makes, that is reported to the credit bureaus, your score will decrease.

Hurt your relationships and make suppliers hesitant to do business with you
In business, everything trickles down, and that includes the effects of late payments. Your suppliers can incur additional expenses and encounter hardships if they don’t have the funds from your payment to cover their expenses. Simply consider if you would want to continue working with companies who don’t pay for your goods and services on time?

Cost you more money
By paying your bills late, you will lose out on early payment discounts that could be offered by your suppliers and other creditors and incur late payment penalties that could take effect the day after you miss the payment costing your business more money. Additionally, as noted above your credit score will be negatively impacted which can increase your rates if you were, for example, to try and get a loan. 

Ensure you have the funds to avoid making late payments
One way to help a business avoid deciding to make late payments to help preserve cash flow is to ensure they have the working capital needed to cover their expenses.  Accounts receivable finance provides businesses with immediate funds for their unpaid accounts receivable allowing them to do just that. 

What is accounts receivable finance? Accounts receivable finance is financing that is based on the quality of the business’ assets, which helps eliminate many of the difficult criteria businesses face when trying to get traditional bank financing. In addition to considering your assets to qualify for accounts receivable finance, a finance company will examine your customer’s creditworthiness making it a good option for new companies and company’s that have a weak credit history or inconsistent cash flow.

 

Let us help you get the financing you need to eliminate the need to make late payments. With Franklin Capital, you get a certainty of funding that can help enhance your flexibility and profitability.  Give us a call today at (847) 579-4780 to learn more.