Considering the current economic climate, everyone is looking for ways in which they can cut costs in whatever way they can. As a business one of your goals is always to reduce costs of operation and maximize profits. There are several financial facilities that most businesses use to reduce cost such as invoice discounting and factoring. By reducing your invoice financing costs you will be assured to survive in the harsh economic times and at the same time grow your business. There are several ways that businessmen can use to ensure they achieve this goal:
- Changing of Products – If you are currently using either invoice discounting or factoring, switching products may save you some money. For instance if some of your products are on a factoring facility plan and at the same time in your business you have products that can utilize credit control, it is very possible to save money by changing to an invoice finance plan in which you don’t get credit control. On the other hand, if you are currently have an invoice discount plan as well as credit control services, you can switch to invoice financing which will help reduce the cost of staffing.
- Bad debt protection Review – It is also recommended that if you apparently have bad debt protection included in your invoice discounting or factoring cover, then you should review its effectiveness in terms of improving your profitability. You should consider things such as your credit limits with the invoice financing company and be able to determine if you are benefiting or not.
- Have your exclusions reviewed – Most invoice financing companies are able to exclude or eliminate some transactions in your invoice facility. This is usually attributed to the fact that there are certain transactions which may not necessarily be needed by the factoring company and can always be done without. As such, you can indicate to the factoring company of such transactions so that they will not be able to charge you extra fee on the same.
Last but not least, you should also try to shop for as many factoring companies as possible and negotiate with them considering that there are several service providers. Invoice financing is quite a competitive industry and therefore it is easy to find a new factoring company that will quote lower rates than your existing firm. This will not only give you a new experience, but also help reduce your invoice financing costs in the long run.