DURBAN - Small business owners who are experiencing cash flow challenges should consider improving efficiencies in their payments collection and processing methods to free up working capital.
Vaughan David, Chief Executive of Business Savings and Cash Investments at FNB said that one of the most cost-effective ways of managing payments is through accepting or offering discounts for early invoice payments.
This usually entails an agreement entered into between suppliers/vendors and businesses to benefit from discounts from the early settlement of invoices for goods or services rendered. Discounts can range from 10% upwards, for payments made within a stipulated number of days of receiving the invoice.
"SMEs have an opportunity to leverage early invoice payment discounts both from a supplier/vendor and customer perspective. This would enable the business to receive invoice discounts while also accepting early invoice payments from its customers," said David.
David unpacked some of the key benefits of making and accepting early invoice payments: