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How Late Invoices Can Harm Your Business

A healthy business is one that shows opportunities to grow to both its employees and owners, but if there is a lack of cash flow, those opportunities can disappear.

One struggle that a lot of business owners share is the late payments from their clients and suppliers because it causes a lack of cash flow for their businesses. If you want to know how this affects your company, read on.

What happens if they take a long time to pay you?

1. You lose money and time…

By chasing a customer or supplier to pay you instead of dedicating that time to improve your business.

2. You can’t grow.

As a small business, it’s difficult for you to grow as much as you’d like and can even find yourself at risk of going bankrupt in a short period of time.

3. Bad reputation with banks.

If you are paying off a loan for your business and your clients or suppliers are slow to pay, the lack of cash flow can make you look bad with the bank and the interests of your debt may increase.

4. You will have no profit.

You will have to distribute your money among all your obligations and there will be nothing left for you because you are “financing” someone else’s business.

5. You affect others.

If other businesses depend on your business, then the delay in payments affects not only you but them as well, something like a domino effect.

To make your clients pay you on time, we recommend the following:

  1. Establish mandatory payment dates in your contracts and penalties for delays.
  2. Offer benefits to those who pay you in cash.
  3. If your strategy is to offer credit, try to only offer it to clients that you consider reliable.
  4. Find a factoring company to receive money for your invoices and contracts.

Your business should offer you and those who depend on it more solutions than problems. At Crédito Real, we want to help you get your business going. Bring to us your account receivables and we will exchange them for the cash you need.

And you, what do you do to increase the cash flow of your business?

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