Operating a call center can be challenging and very expensive. Your company needs to carefully manage all costs such as telecommunications, infrastructure, and personnel. Personnel expenses can be particularly challenging, as hiring and training customer service representatives (CSRs) is costly and can be an ongoing problem due to churn (turnover). However, all of these expenses need to be paid regularly to ensure the smooth operation of the call center.
Slow customer payments
On the other hand, many of your corporate call center customers negotiate 60 day net payment terms into their contracts, allowing them to pay their invoices eight weeks after delivery of services. This delay in payment can create a financial problem for call center operators that need funds sooner to pay operating costs.
Slow-paying clients can create cash flow problems even for call center operators that are very profitable. These problems can be insidious and affect you when your company appears to be growing quickly.
Faster payments don’t fix the problem
Obviously, these problems would be greatly reduced, or even eliminated, if call center clients paid their invoices quickly. However, clients get an important financial benefit from paying their invoices in 60 days and are usually reluctant to pay sooner. And even if you convince them to pay sooner, using a discount or other incentive, there is no guarantee that they will always pay quickly.
Consequently, asking for faster payments is not a reliable solution to this problem. For many call center operators, the better solution is to use business financing to improve their cash flow.
Is business financing the solution?
Most cash flow problems can be fixed easily with the right source of business financing. The problem is that most loans and lines of credit have difficult qualification requirements and stringent collateral criteria, making them inaccessible to small or growing call center operators. For many call center operators, a better alternative to conventional business financing is to use invoice factoring.
Finance your invoices – improve cash flow
Factoring financing solves this problem using a relatively simple solution. A factoring company finances your open invoices from creditworthy clients, giving you immediate access to working capital that can be deployed to pay important business expenses. It also relieves the financial pressure from slow-paying customers and provides you with “breathing room” to manage and grow your business. The transaction settles once your customer pays their invoice on their regular schedule.
This type of financing does not require your customers to pay any sooner.
Factoring financing is easy to obtain
Qualifying for factoring financing is easier than qualifying for conventional business financing. The most important requirement is that your customers have good commercial credit, since their invoices, and their payment track record, act as collateral for the transaction. Additionally, your company must be well managed and your invoices must be free and clear of any encumbrances.
Most factoring facilities can be deployed within a few days. If you are looking to apply for factoring, be sure to provide a professional-looking application package and use this tip to improve your factoring application.
The most important business advantage of factoring is often overlooked by most business owners, at least initially. Since your factoring line is tied to your invoices, the line can grow automatically as your sales increase, meaning that the line will support your growth, as long as your company and your clients meet the factoring criteria. This important feature can help growth-minded companies. And it’s what makes factoring an ideal source of financing for call centers that have cash flow problems and can’t qualify for conventional business loans.
Get more information
We can provide you with a competitive factoring quote. We offer high advances at low rates. For more information, please call (877) 300 3258.