We know how hard and time consuming it can be following up slow payers. Most clients have good intentions to pay on time, but sometimes, their cash flow makes it difficult to pay everybody on time. Professional Fee Funding makes it easier for your clients to pay you: on time and in full.
While your business gets paid 100% of your invoice upfront – your clients pay off smaller “bite sized” monthly amounts. Simple, yet there are several myths or misunderstandings about fee funding. In this article we bust the top five myths so you can better use this option in your business.
Myth One : Fee Funding is only for the worst slow paying clients!
Fact: Firms that offer professional fee funding to ALL their clients report that regularly clients with very good payment records have used the service. Why? When we ask them via a survey they say “because it suited their cash flow at that particular point in time”.
Myth Two : Fee Funding is only for invoices under 90 days old.
Fact: This is incorrect. smartAR regularly funds invoices that are over 12 months overdue. We had one client that funded an invoice nearly 5 years overdue–which we did with no problem.
Myth Three: There is more chance a client will default if they don’t pay upfront
Fact: The opposite is true. More clients are capable of paying a small regular instalment than paying a large lump sum. Think about things like your domestic insurances or rates bills–clients often prefer to pay on an instalment basis as it better fits their regular cash flow and budget.
Myth Four: The reversion liability might mean you end up paying back more than was funded
Fact: The smartAR fee funding process ensures our clients are always better off. Your firm will enjoy the cash flow benefits of getting paid in full up front and with the smartAR service there is no charge for unpaid interest or penalties on any reversions. It is impossible to be worse off – unless you don’t offer fee funding and clients don’t pay you at all.
Myth Five: Fee funding is mainly for little clients, funding small amounts over short terms.
Fact: We do fund small invoices (under $1000), however most of our borrowers are funding around $10,000-$20,000.We also regularly fund bills well over $100,000. The terms of loans all depend on your client’s needs, and can range from 3 months up to 18 months. Clients fund fees generally because it is easy to process (less than 3 minutes) allowing them to pay you in full – quickly.
If you want your business to win more work and reduce time, hassle & money chasing slow payers, then please reach out to one of our smartAR cash flow specialists. They will help guide you towards improving your accounts receivable and gaining more predictable cash flow.