For small and medium-sized businesses (SMEs) in New Zealand, the notion of ‘accounts receivables’ has long been ingrained as an inevitable aspect of running a business. But what if it didn’t have to be this way? Before we explore how this cycle can be broken, let’s first define what accounts receivables are and why they’ve become such an accepted part of business operations.

Understanding Accounts Receivables

Accounts receivables refer to the outstanding invoices a company has or the money owed by clients for goods or services delivered. This is essentially a line of credit extended by the business to its clients, allowing them to pay for their purchases at a later date.

While accounts receivables are considered an asset on the balance sheet, they come with a host of challenges:

• Cash Flow Issues: Delayed payments can create cash flow problems, making it difficult to cover operational costs.
• Administrative Burden: Significant time and resources are dedicated to chasing down unpaid invoices.
• Debt Management: Businesses often resort to overdrafts, invoice financing, or debt collection services to manage outstanding debts.
• Bad Debt: Inevitably, some debts are written off as uncollectible, which is seen as an accepted cost of doing business.

The Hidden Costs of Accounts Receivables

Many SMEs have come to accept these challenges as part and parcel of doing business. Here’s how this acceptance manifests:

• Overdrafts: Businesses often rely on overdraft facilities to cover short-term cash flow gaps caused by unpaid invoices.
• Invoice Financing: Some companies use invoice financing, selling their receivables to a third party at a discount to get immediate cash.
• Administrative Costs: A considerable amount of administrative time is dedicated to monitoring receivables, sending reminders, and following up with clients.
• Debt Collection: Engaging debt collection agencies to recover overdue payments incurs additional costs.
• Writing Off Debt: Each year, businesses write off a portion of their receivables as bad debt, considering it an unavoidable expense.

Breaking Free from the Accounts Receivables Trap

The conventional wisdom that accounts receivables are an unavoidable part of business is now being challenged. With innovative solutions like IPromise, businesses no longer need to accept delayed payments and the associated headaches.

IPromise offers a game-changing approach: securing payment before the work begins. Here’s how it works:

• Prepayment: Clients commit to payment before the job starts, ensuring businesses are paid immediately upon delivery.
• Guaranteed Cash Flow: With payments secured upfront, businesses can maintain a healthy cash flow without resorting to overdrafts or financing.
• Reduced Administrative Burden: No more chasing invoices or dedicating significant administrative time to manage receivables.
• Eliminating Debt Collection: With payments guaranteed, the need for debt collection services disappears.
• No Bad Debt: Writing off uncollectible debts becomes a thing of the past.

The Future Without Accounts Receivables

Imagine a business environment where SMEs in New Zealand no longer have to deal with the complexities and costs associated with accounts receivables. With IPromise, this vision is within reach. By securing payments before starting the job, businesses can ensure they get paid every time, immediately upon delivering the service or product.

This approach not only enhances cash flow but also frees up valuable time and resources, allowing businesses to focus on growth and innovation rather than debt management. The era of accepting accounts receivables as an inevitable part of business is over. With IPromise, SMEs can embrace a future of guaranteed payments and financial stability.