Manage Trade Credit with a suite of AR Best Practices services
AR Best Practices is a suite of business payment services to outsource your accounts receivable administration tasks, providing your AR staff with the tools they need to succeed.
About Trade Credit
Accounts receivable (A/R), sometimes called trade receivables or trade credit, is the amount that customers owe a company for goods and services that have been provided. In most business entities this is typically done by generating an invoice and delivering it to the customer which is to be paid within an established timeframe called credit or payment terms.
Traditional availability of free and flexible trade credit is a primary source of funding of most businesses in the US . More than 90% of B2B companies depend on trade credit as their largest source of capital than any other source - more than bank debt or owner's equity. The reasons are simple: trade credit is free (interest is rarely charged), it is flexible (terms are regularly abused) and it is easy to get (if one vendor doesn't provide, the next vendor will). Business buyers will seek out vendors that give the longest payment terms because it is the easiest and least expensive way to fund a business.
Outsourcing your trade credit administration is a smart strategic decision
If your company is like most, much of your cash is tied up because you’ve been lending it to your customers through trade credit, providing free, short-term loans to your buyers. Additionally, most small and mid sized businesses don't have the scale to operate trade credit operations cost effectively.
Just like outsourcing other business functions like payroll processing, businesses can benefit by outsourcing many of the paper-based dministrative functions of operating an in-house trade credit program for B2B transactions.
Start Outsourcing to Achieve:
- Increased capital availability with faster payment cycles on invoices using professional lockbox services for next day deposits
- Reduced risk of non-payment on invoices or customer bankruptcy with credit scoring and monitoring
- Reduced administrative costs and burdens of extending and managing trade credit invoices
As specialist in B2B payments, we understand the many challenges of running a successful business.