Collecting your Receivables
The difference between current assets and current liabilities is known as net working capital. The longer the production process, the more cash your business must keep blocked up in inventory. Similarly, the longer it takes your customers to pay their bills, the higher the value of your receivables. Your business must try to reduce the period that you hold inventory and accounts receivable thus reducing the amount of working capital for your business.
The average First Bank of the Palm Beaches customer does some work for a company or person, sends them a bill or invoice and waits patiently in the mail for that payment to come. The check will then sit in the mail inbox for a day or two until the office manager checks the mail and possibly then sits on the office manager’s desk for an additional day or two until that person gets to the bank to make the deposit. First Bank can help reduce the time to collect receivables in a few ways.
First, with Remote Deposit, your office manager does not have to wait for the available thirty to forty minutes that it takes to get to the bank, wait in line and make the regular deposit. Checks can be scanned from your office manager’s desk in about a minute or two and funds are available for your use next business day. Remote Deposit is the easiest and fastest way to knock a day or two out of your collection process.
Businesses and individuals alike are much more comfortable with electronic banking than they ever have been before. If your small business accepts regular payments from your customers, ACH origination might be a viable option for you. First Bank’s Cash Management product allows you to enter the bank account information provided by your customer via your agreement with them and pull funds directly from their account to your account. By accepting ACH payments from your customers, a single receivable can be cut from 30 days down to 24 hours. It is hard to reduce receivables more efficiently than that.
Wire Transfers are often not the most cost effective way to accept payment from customers but for large payments or for international payments, they play a vital role in the collections process. Let us advise you when taking these kinds of payments from your customers and get those funds into your account immediately with proper use of wires.
Working Capital Lines of Credit
Various industries simply have no easy way to reduce receivables times effectively. Government or municipal clients often take 60 to 90 days to pay while of course your vendors expect immediate payment. If you can’t collect your receivables more efficiently, look into a working capital line of credit provided by First Bank to take pressure off of your working capital needs.