How Past Due Invoices Impact a Business
3 May 2018
In a 2016 survey, more than 30 percent of business owners said late payments are the top deterrent to business success. This should come as no surprise to anyone that’s ever attempted to collect payments. A company’s ability to invest, develop and expand is, after all, predicated on its ability to rely on timely customer payments. If projected cash flows are deemed unpredictable, a business owner will be reluctant to commit to investments needed for growth or for the defense of their market share. Internal billing administrative errors do occur, but the blame most often lies with customer behavior. Measures must be taken to minimize late customer payments and to properly deal with past-due invoices.
The Negative Effects of Late Payments
From Creditor to Debtor. When funds are urgently needed to cover fixed costs or growth initiatives and there’s no response from past-due customers, business owners can only turn to bank loans. As a result, the creditor merchant quickly transitions to a debtor.
Bad Credit. A business owner may rely on customer payments to fulfill debt obligations or vendor payments. Consequently, late customer payments can result in late payments to creditors or vendors, which damages the business’ credit score, and in turn, makes it difficult to receive loans in the future.
Frequent Distractions. A business will thrive when its owner has time to strategize about efficiency and growth, and conversely, it will suffer when its owner has to worry about past-due invoices, unpaid bills, and a poor credit score.
Avoiding Financial Stand-Still
With ChargaCard, businesses are assured reliable, timely payments from customers paying either installment plans or recurring bills. The ChargaCard platform allows business owners to create a schedule of monthly payments that’s executed via automated cash transfers directly from customer to business bank account on the same day each month. No invoices to mail, no checks to process and no need for collection agents. It’s free to sign up, there are no monthly or merchant fees and no interest charges. Just a one percent transaction fee for a thoughtful payment solution that gets your business paid on time.