If only you land that one big client? It will put an end to all your cashflow worries, yes?
Well, no actually, it won’t. Putting all of your eggs in one basket, that rings true with this business myth. You see, whilst big clients are great to have, they won’t always solve all of your problems. Yes, there are benefits, but let us explain some of the disadvantages and how to overcome them.
One big client = one big invoice = one big overdue payment = one big problem.
It’s easy to forget, that one big client will mean you have one big invoice. The chances are that this one big invoice is going to be paid late; especially when 70% of all invoices last year were overdue.
How are you going to pay your suppliers, your staff and restock if you are totally dependent on that one payment? The biggest reason SMEs fail is due to lack of cashflow and working capital. This fact will be even more prevalent to you if you’re solely reliant on payment from one big invoice.
Fact: SMEs last year were owed £44.6 billion in overdue invoices!
What is the Biggest Reason Invoices Are Delayed?
Is it because they are incorrect?
When they do finally reach the top of the pile, they are returned as they cannot be paid. Here’s our checklist for accurate invoice payment:
- Addressed and sent to the correct person
- Inclusion of purchase order number (if applicable)
- Correct payee and payer company details and billing addresses
- Correct totals, including VAT (if applicable)
- Inclusion of itemised billing (if applicable)
- Ensure payment due date is clear
- Ensure your payment options are not only clear but simple to make
- Dated correctly
Don’t forget, once you have sent your invoice, as obvious as it sounds you must ensure that you start to chase them the moment they are overdue.
One Big Solution
Yet, over 44,000 SMEs in the UK don’t have this problem! That’s because they use a form of invoice factoring. Instead of waiting 60, 90 days or even more to be paid by their customer, they wait a mere 24 hours to received up to 90% of the invoice from their factoring provider, with the balance paid when their client has paid.
Some invoice factoring providers also include bad debt protection in their facilities. This is vital if you are relying on one big customer for most of your sales. If that one big customer fails, then you will still be paid - it won’t mean the end of your business!
Begin Your Invoice Factoring Journey NOW!
Call our award winning team, about our award winning factoring solutions, on 01908 268888.