Invoice financing is sure to come up as an option after you must have done a thorough research for your financial issues, most especially for small and medium-scale businesses. As you do your research on invoice financing and how it can benefit your business, you might also like to know if the invoice financing company does collections on your behalf.
Invoice financing companies are not debt collectors but they are similar in the sense that they both help businesses collect their unpaid invoices.
Although, not every invoice financing company will handle collections on your behalf such as Bridger does for you.
Invoice Financing vs. Debt Collection
Debt collection is a formal process or procedure that involves collecting on debts that are past due. So right here is a big difference between financing invoices and collections. Invoice financing companies are collecting on current invoices, debt collectors are collecting on past due invoices.
Some invoice financing companies offer debt collections to their clients while in other companies, you might have to go to a separate debt collection company.
Determining what is best for your business between invoice financing and debt collection companies for unpaid invoices needs an evaluation of your finances and understanding which option would be best for your business at that particular time. Below are a few reasons that might make you prefer the invoice financing option to debt collection services;
•Simple process: Anyone would prefer an option with a simpler process and invoice financing offers just that. Debt collections can be exhausting and can sometimes involve having to contact the debt collectors severally before they carry out their job. They can also be too delicate in their dealings sometimes in order to avoid making the customers angry. However, invoice financing is a fast and simple process that is less likely to result in annoyed customers.
•You have a lot of unpaid invoices. If you have a lot of current unpaid invoices, invoice financing is your best option because invoice financing companies focus on current unpaid invoices, while debt collectors accept invoices that are way past their due date.
•You need money now. If you need cash flow right now, invoice financing is your best option because this gives you access to cash as soon as your application is approved. Whereas, debt collection can take months to actualize because this might need you to call the debt collectors severally before your money is retrieved from customers and this can affect the smooth running of your business.
There are other financing options other than invoice financing that you could research and apply for whichever is best for your business at that particular time such as loans, grants, crowdfunding, etc.
Tips on How to Collect Unpaid Invoices
Getting your customers to pay what they owe isn't always easy, because you try to be as delicate as possible to avoid upsetting them, so as not to lose the relationship that has been built between both parties.
There should be a contract signed by both parties before you get into business together clearly stating preferable payment terms and all other important details that are crucial to the transaction.
If you are already in business without a contract and the customer is owing, the next best thing for your business is to contact a professional with absolute decency to handle the debt collection on your behalf. An example is; property owners hiring the services of a caretaker to handle collections from their tenants.
Leaving debt collection in the hands of a professional gives you room to focus on smooth running of your business and tending to the needs of your other customers.