In our business, we deal with small businesses, but we also deal with their customers. We do this by helping our clients manage their invoicing and collections process, which includes both the buyer and the seller. Because of this we are often in contact with not only our direct customer, but often their vendors and customers as well.
Whenever we meet a new prospective client for the first time, there are often some reservations with someone else being involved in their customer relationships. How will my customers view these changes?
Today we'd like to address some of these reservations with our experience in this area - which hasn't been negative!
1. Everyone has a lender
Virtually every business in existence operates on more money than just the owner's initial investment. Whether it is private investment, factoring, a traditional bank, shareholders or any other combination, working with a financier is a reality for most small business owners. In addition, each type of financing may serve a different purpose, and may have different requirements. Your customers are aware that you have regulations and covenants related to your lenders. It's very likely they are experiencing the same influences in their business!
2. Customers appreciate organized invoicing
In the hustle and bustle of selling new business, training and managing employees, securing inventory and all the other "to-dos" of a running a business, unfortunately invoicing and billing can sometimes take a back seat. Your customers purchased your goods and services and expect to pay for it - but they won't often seek you out to do that. Factoring requires your billing and invoicing process to be clean and kept up to date. For many clients and their customers, the forced attention to this area of business creates a smoother accounts receivable and collections process overall. This is a positive for all sides.
3. Communication is a good thing
On a similar note, working with a company like ours often leads to increased communication with your customers. Many small business owners are surprised to learn that their customers have confusion over invoice terms, payment criteria and other details. They also often forget to follow up on unpaid invoices in a timely manner. By working with experts in this area, you can move toward quick, informative communication with customers which moves payments through more quickly.
4. Offer the terms you want
For many start ups, offering the luxury of 30 or 60 day payments may not be possible. In the beginning it is imperative that each new invoice is paid immediately so the business can turn around and pay it's vendors and employees. It can be difficult to land a new, larger account when you cannot offer the same payment flexibility as a competitor. With a lender involved, you can have the same flexibility as others, even if you still need your money quickly.
All in all, having a financier or lender involved is commonplace. It increases communication and streamlines your invoicing and collections process. Most customers are familiar with and prepared for these types of arrangements. Finding what works best to help your business grow is always what is best for your customers!