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How to support your business when customers don’t pay on time

Published on 24th February 2017 - Last update on 14th January 2020

Your business relies on a constant stream of customers purchasing or booking goods and services. Without the money they bring in your business would cease to be, making appeasing their exacting demands all the more necessary. Of course, this can be a challenge, but that’s not the only issue that can arise. Even though you may have drawn their attention and lived up to their standards, getting them to pay up on time can be a different ball game altogether. So when this complication strikes, how can you support your business?

How can delayed payments affect your business?

Until a customer has paid in full for the goods and services that they’ve received, a financial black hole is left in the heart of your business’s finances. Late payments can be detrimental to your business’s long-term growth and sustainability, affecting everything from paying bills, wages, tax demands, the ability to purchase vital equipment and so much more. If left untended, this financial black hole can, and will, drag your business past the event horizon, or the point of no return, and ensnare you in the grips of insolvency. However, there is a way to avoid calamity. With Rangewell, you can source the perfect finance product to suit your business’s needs, including Invoice Finance.

What is Invoice Finance?

Delayed payments needn’t spell disaster. Invoice Finance is here in your moment of need and is designed to support and aid your business. This package works by unlocking and utilising the cash sealed away in any and all of your business’s unpaid invoices. With this product, you can feel at ease by receiving a lump sum equivalent to 90% of a single invoice’s total worth. Plus, you won’t have to start making repayments until the customer makes a full payment or begins paying in instalments, plus interest. However, the repayment scheme depends upon the type of Invoice Finance you’ve applied for.

  • Invoice Factoring

Invoice factoring allows you to utilise a lump sum based upon the value of your outstanding invoice. Supporting your business whilst you wait, the repayment process won’t start until the customer pays up in full or begins making instalments. However, a lender will set down a term, outlining how long they’re prepared to wait. If this period passes then they’ll expect the repayment process to begin regardless of whether the customer has paid or not.

  • Invoice Discounting

How Invoice Discounting works, as opposed to factoring, is by having the customer in question make payments directly to your finance lender instead. However, you’ll still receive a lump sum in the region 90% of the invoice’s total value to support your business. Plus, when it comes to ensuring payment from your customer, you can choose to either be the credit controller or utilise your finance provider’s ledger service, for a fee, if available. Once your finance provider has received the funds from your customer, a balance is then made payable to your account. So if you’ve received 90% already, this balance will be the remaining 10% minus any incurred costs and fees.

Why Rangewell?

Our values are simple – We’re on your side. Our services are clear and transparent. We support a wide range of SME businesses of every shape and size, for finding every type of finance. Follow us on Twitter and LinkedIn for business tips and tricks, and feel free to call us on 0203 637 2340 if you’d like to chat about what we can do for you.

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David Harrison

David Harrison

Content writer
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