Alternate to Factoring
Aron subscriber Posts: 3
edited August 2006 in Growth Funding
Heard a lot about factoring on recent SuN shows. Just want to remind everyone that terms of an invoice are always negotiable. On numerous occasions customers have placed large orders with us and cash flow gets tight. What we will do is offer 2% 10 net 30. Meaning if the firm that purchases the product pays within 10 days we give a 2% discount, after 10 days full payment is due.This finance strategy has double benefits. First we usually get paid within 10 days and we can pay off any short term loans that we may have taken. Second (and possibly more critical) is our invoices rarely go past 30 days. I asked the accounts payable people why we were so lucky and they explained "Invoices with discounts go to the front of the line. We may not process them all in time but because there is an opportunity to save money that invoice will not be processed in the order received. It always receives priority."Hope this helps.
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