6 funding solutions that overcome the challenges with getting paid on time

16/04/2020

When even one client doesn’t pay on time, your business can be faced with a series of complications to deal with.

If you’ve ever found yourself managing a late payment, you’ll know that not only is it frustrating and time consuming having to chase the debt, but the impact can be felt by many other areas of your business.

While your in-house team (or an external debt collection agency such as Hilton-Baird Collection Services) is busy chasing the debt, it may be beneficial to turn your attention to the funding solutions that you could use to offset these challenges.

Here are 6 funding solutions that can help you keep your cash flow healthy despite late payments.

Invoice finance

Invoice finance facilities unlock up to 90% of an invoice’s value within 24 hours of its issue. Funds that would have been tied up waiting for clients to pay are available immediately, for your business to use as needed. Once a client has paid the invoice in full, the lender will then release the rest of the money to you, minus their fees.

There are different types of invoice finance that are designed to help businesses with different requirements. For instance, factoring also includes a sales ledger management service, removing the burden from your business.

Invoice finance is a great way to keep your cash flow moving and means that you don’t have to wait on clients’ payments before you can cover your own running costs, pay your suppliers or invest in your business.

Asset based lending

Asset based lending (ABL) releases funds against assets tied up on your balance sheet. With an invoice finance facility at its core, it also allows you to release funding against assets such as plant and machinery, stock and property.

ABL is a good solution for established businesses who are likely to have more assets available. It allows you to raise funding for a number of purposes, including boosting your cash flow and overcoming the challenges of trading on credit terms.

Payroll finance

If your business is in the recruitment sector, payroll finance can help you manage your cash flow. It provides administrative and back office support across the business, whilst making available the funding that you need to pay temporary workers’ wages.

When using payroll finance, you will send timesheets to the funder, who will then raise an invoice and send it to your client, pay the temporary workers and make any surpluses available to your business. The funder will then collect payment from your client, removing the burden from you entirely.

Trade finance

If you conduct business with clients overseas, you’ll be well aware of the risks that can come along with international trading. Using trade finance, you can protect your cash flow and keep your business running even when it takes a long time to get paid.

There are several trade finance solutions that you could consider depending on the nature of your business, like export finance, which releases funding either against an order value or when goods are shipped and is a great way to help you manage your cash flow.

Loans

You may not think of taking out a business loan when you’re having trouble with late payments, but a business loan can be a great solution to the underlying problem, your cash flow. Business loans are a great way to boost your available cash and can be used to cover any running costs or bills that have been affected by not being paid on time.

In many cases, funds secured through a business loan are released quickly, making it a good option if you already have an ongoing issue with late payments.

Credit insurance

If your main concern around delayed payments is protecting your business in case those outstanding invoices become bad debts, then credit insurance is a good solution.

When an invoice becomes aged or if one of your customers enters insolvency proceedings, a credit insurance facility will pay you for any goods or services you have supplied, subject to a credit limit, and facilities can be incorporated into some funding solutions.

Choosing the right funding solution

When it comes to finding the right funding facility, a commercial finance broker can save you time and money by helping you find a solution specific to your needs and giving you direct access to key decision makers.

Our sister company, Hilton-Baird Financial Solutions, is an FCA-regulated commercial finance broker with over 20 years’ experience. Their main focus is helping you find a funding facility that fits your needs.

To speak to a funding consultant at Hilton-Baird Financial Solutions, you can call 0800 9774833 or request they call you back at a time that suits you.