How you can save money by using accounts receivable factoring?
Here's what you need to think about as we go through this. How much is it costing either you or your business to collect accounts receivable? Are you paying an employee or group of employees? Are you paying a collection company? I want you to try to figure out how much this area of your business really costs you.
How Much Does Your Accounts Receivable Personnel Cost?
Now according to Salary.com, an accounts receivable clerk makes anywhere from $26,000 to $43,000 a year and a senior accounts receivable clerk makes from $30,000 to $47,000 a year. That's a wide variation and likely represents the expertise of the individual, as well as the geographic locations where they work. The bottom line is, that is a business cost, and it is not a revenue generating position.
Sure, a really good accounts receivable clerk may collect more than a bad one, so in a sense they brought cash into the business, but they are really only collecting money you have already generated by selling a product or providing a service to a customer.
Using a Factoring Company to Collect Your Accounts Receivables?
Now, think about this. Accounts receivable or invoice factoring companies are not only a good source of cash for operating and growing your business, they are experts at assessing and collecting on accounts receivable invoices. That is one of the main focuses of their companies and it is how they get paid. They have a vested interest in making sure that all the payments come in on time. So when you utilize a factoring company, you, in a sense, outsource your accounts receivable at no extra cost. You can eliminate your accounts receivable position(s) or you can reassign those employee(s) to higher payoff tasks.
Now only you can figure out exactly what you are spending on accounts receivable collecting and how much you would save if you outsourced this cost center to the expert invoice collectors at a factoring company. However, it is definitely worth looking at.
Some Advice on Outsourcing Your Accounts Receivables to a Factoring Company
Now let me give you a few other pieces of advice about using a factoring company for your accounts receivable:
Again, I hope this has helped you to see how accounts receivable financing can save your business some money. If you would like to receive more information give us a call at 877-648-3709.
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