How Professional Service Firms Get Paid Rapidly on Invoices
When your Professional Services or Business Services Company needs steady cash flow, the last thing you want is to wait 30, 60, or 90 days to receive money from your customer. Your small business should have a rapid invoice payment system that allows you to get paid as quickly as possible so that you avoid the kind of cash flow crunch that can occur when unpaid invoices begin to stack up.
The most reliable means for Business and Professional Services Companies to get paid quickly are invoice purchasing programs, invoice factoring companies, and the newest technology-powered accelerated invoice payment system. Invoice purchasing programs purchase invoices at a discount, while invoice factoring advances a percentage payment on an account receivable (another term for invoice). In contrast, accelerated invoice payment pays the total amount of the invoice (minus a small fee) almost immediately.
In a rough economy, professional and business services companies suffer when clients take too long to pay invoices. Slow-paying customers stifle inbound cash flow, negatively impacting the working capital you need to operate, grow, and scale your company comfortably.
Types of B2B Service Companies that Accept Invoices
Because so many small businesses provide professional and business services to other businesses, we can only briefly touch on a few well-known types for issuing invoices with extended payment terms.
- IT and Computer Consulting
- Staffing and Human Resources Help Agencies
- Advertising Agencies and Digital Marketing
- Architectural and Engineering Firms
- Laundry Dry Cleaning Services
Any operation that provides services, skills, knowledge, and experienced guidance to other businesses or local, state, and government agencies can be classified under the professional umbrella. These transactions are classified as Business-to-business or Business-to-government, although some companies cater to both client types.
Part of the normal business environment expectations for B2B and B2C professional firms is issuing merchant credit so clients can do business now but pay later by agreement. As such bills require no immediate resolution, they are labeled as ‘Extended Payment Terms’ and typically range between 30 to 90 days. An invoice is a bill given to represent the money owed by the client.
On average, the more challenging the economy, the longer it takes to get paid and the more difficult payment collections become.
Invoicing Can Become A Problem for Professional & Business Services.
Small businesses have survived, even thrived, using the merchant credit-based invoice system that allows clients to “buy now, pay later” per an extended payment schedule. Problems occur, however, when a client has difficulty making payments, which can happen for many reasons.
In good times, the fault may lie with the business owner’s skill set, but in this economic climate resulting from the global pandemic of 2021, much of the blame can be attributed to shaky economies worldwide. High inflation, ballooning interest rates, and skyrocketing costs of material, supplies, and staffing put a strain on most small business entrepreneurs, who are forced to pass added costs on to customers to generate enough revenue for sustainability and growth.
In harsh business environments, client invoices are increasingly at risk of slow payment and default. Offering extended payment terms when the financial news reports about recession signals is a risky move when your professional service business needs cash flow and working capital as fast as possible for daily operation, investment, and growth. Transacting business using invoices becomes simultaneously vital and high-risk.
- The longer the extended payment term of the invoice, the higher likelihood of slowing payments, defaults, and requirements for distasteful, aggressive collection tactics.
- As the invoice sits for weeks or months, it loses a percentage of its monetary value due to rising inflation and weakening currency. The money paid to your company at the end of a 60 or 90-day period is worth less than if it had been paid a couple of months earlier. When wild inflationary swings occur, the value can drop significantly.
- Every partially paid or unpaid invoice represents an amount of cash flow and working capital that is now unavailable for daily operations. That means the invoice cannot be used to pay vendors and suppliers, staff, or utility providers. Until the money shows up in your business bank account, the invoice works as a potential financial liability.
Because unpaid invoices carry so much risk in an uncertain economy, converting them into liquid cash flow for deposit into your bank is more important than ever. The faster you turn invoices over into working capital, the better your chance of weathering upcoming economic storms.
Three Tools Professional Services Use for Faster Invoice Payments.
Rapid invoice conversion is vital because traditional bank loans and lines of credit have either begun to dry up for many small business owners or become too expensive for a small business balance sheet.
Belt tightening by the banks forces professional service businesses to find an effective means of getting more inbound cash flow for a more robust working capital picture. One way your business can do that is to stop waiting weeks or months on client payments. Here are three common ways small businesses like yours have used to speed up invoice payments, in order of good, better, and best.
Invoice Purchasing Programs
Invoice Factoring Companies
Accelerated Rapid Invoice Payment
Companies that buy invoices at a discount have been around for decades, but the old days of standing in line to submit grease and dirt-stained invoices to a clerk are over, thanks to digital technology. Large banking and global corporate tech have begun online programs to buy or loan a percentage of an invoice’s value according to strict, often murky rules.
The useful aspect of invoice purchasing programs is that many companies have vast financial resources to provide the working capital required. This means they have the money available if you can make it through the stringent credit and reference requirements and layers of paperwork to qualify.
The bad part is that with big companies come influential lawyers and layers of hoops to jump through that can rival traditional lenders. Worse, programs through companies like Facebook require access to all your client data so that they can market and sell to them without your permission. With litigation being their finest weapon, any recourse arrangements crafted into the fine print of their contracts put your company at risk if your client does not pay. Like invoice factoring companies, they probably won’t pay you the total invoice value upfront.
With a decades-long, sometimes questionable track record, invoice factoring has helped keep the doors open and lights on for thousands of small businesses. Invoice factoring companies are somewhat like invoice purchase firms in that they, too, will help cut down on invoice payment wait times. Similarly, they offer to pay a percentage of the invoice face value up front and will resolve the remainder weeks, if not months later, after the client has paid.
Invoice factoring has the advantage of being more established than mega-corporate invoice purchasing programs. Still, they are no less litigious and have a long track record of business complaints over hidden fees, disguised interest, and added costs buried deep in the fine print. When invoice factoring companies engage in ‘Recourse Agreements,’ as is often the case, then they will hold your company responsible for running aggressive collection actions against your own clients if payment problems arise.
Small business owners have needed a better way to get paid faster on client invoices for so long that NowAccount has changed how Professional Services and Business Services companies get paid. Unlike invoice purchase and invoice factoring programs, it was designed by entrepreneurs exclusively for entrepreneurs and business owners who have a pressing need for liquid inbound cash flow quickly.
Advantages of Rapid Invoice Payment for Your Business
The newest, patent-pending financial technology for small business entrepreneurs is called NowAccount, built from its inception to be the best, easiest, most trusted accelerated invoice payment option available to Professional Service and Business Service companies.
NowAccount succeeds brilliantly over invoice purchasing programs and invoice factoring companies by offering multiple advantages for business owners without their downside risks. For example,
- The immediacy of Invoice Payment. NowAccount completely eliminates the need to wait 30, 60, 90 days, or longer. Instead, you can upload select invoices according to your company’s goals and needs. This rapid invoice payment system does not monopolize your client list and allows you to choose. Payment happens with an expediency that gives B2B and B2G transactions the kind of convenience that feels like taking a credit card.
- Easy, Simple to Qualify. The Pre-qualifying Process for NowAccount is so easy and straightforward that it takes no complicated paperwork or hoops to jump through. You simply create an account, add only the customers you want, and upload the invoices for approval and rapid payment
- NowAccount is not a loan, nor is it invoice factoring. The working capital you get through NowAccount is debt-free, adds no liabilities to your balance sheet, and does not need to be paid back.
- A Convenience Similar to Taking Credit Card Payments. NowAccount allows you to transact using B2B and B2G invoices conveniently with a sense of ease, similar to using a credit card. Rather than settling for 50% to 90% of your invoice face value, get paid what it is worth minus a small merchant fee, just like when using a credit card. You eliminate the long wait, get paid quickly, and save on costs with total transparency and no hidden costs or disguised fees.
- No personal guarantees are required. NowAccount is a ‘Non-Recourse’ working capital solution. If your client runs into economic trouble and has difficulty making payments, your business will not be held responsible, and you will not be forced into taking collection action. Further, your business relationship with your client remains seamless because they get to take advantage of extended payment terms while you still get paid right away. Nothing interferes with your arrangement, and NowAccount remains an unobtrusive, silent financial resource.
As a small business owner operating a Professional Service or Business Services company, you need a financial tool that lets you take care of immediate needs and gives you breathing room to scale and grow with less worry. You want to be paid as fast as possible without waiting for months or losing value on the invoice due to inflation. You know that the faster you get paid, the better for you to put that cash flow to work.
If you want to eliminate the wait on invoices, get paid as fast as possible, and maintain your privacy while lowering financial liability and risk, then take your first, easy, simple step with a painless pre-qualification through NowAccount.