How Dallas Area Startups Manage Accounts Receivable
For Startups in Dallas, one of the major challenges is keeping accounts receivable from spiraling out of control. Tracking unpaid customer invoices across multiple accounts can take a lot of time and resources. Considering startups are already running on a lean but robust structure, delays in payments can often place a big strain on cash flow, forcing entrepreneurs to take on debt-based financing to keep things moving forward. Many Dallas area startups have found alternative ways to manage accounts receivable to maintain a healthy cash flow.
Late Fees on Invoices
Late fees on invoice payments are nothing new to Dallas area startups. Be it a product or a service, customers have come to accept that businesses across all industries will tack on late fees if payments are overdue. While late fees can ensure payments are made on time, they do not guarantee that customers will settle their accounts early. Since many startups in Dallas issue invoices with staggered payment schedules of 30 days or longer, they still have to wait at least a month to see revenue. If your startup is going to use a policy of late fees, your must have appropriate signage in your office, inform your customers of the fees before a sale is finalized, and have the appropriate verbiage visibly printed on the invoice itself. This avoids potential legal entanglements further down the road.
Down Payments on Orders
Another way that Dallas area startups are managing receivables is to require down payments on orders. When customers put money down on an order, they are more likely to pay off the balance in a timely manner. While most businesses used to do this for large orders, it is becoming commonplace for smaller sales as well. However, a down payment policy can be rather polarizing. Requiring down payments can deter sales, if not repeat customers. Some people see it as a draconian measure and might go elsewhere for similar products and services.
Accounts Receivable Financing for Dallas Area Startups
Perhaps one of the least invasive ways to manage accounts receivable and ensure a healthy cash flow is to use AR financing, or factoring. AR financing is a debt-free solutions in which unpaid invoices are converted to cash, often within a single business day. Startups in Dallas, TX can use factoring services to eliminate staggered payment schedules and sidestep the need to require down payments or late fees. By using accounts receivable financing, startups across all industries can reduce the need for debt-based loans and accumulate the capital necessary for growth.
At Oxbow Capital Partners, we provide accounts receivable financing for businesses in all industries throughout Dallas, TX. Contact our offices today to learn more.