Creditworthiness is a term often used by financial institutions to gauge their ability to secure loans or other types of financing. It would stand to reason that business owners are concerned about their own creditworthiness, which is why many are focused on building credit ratings for their organizations. But should you be concerned about the creditworthiness of your clients?
Credit Worthiness and Cash Flow
The creditworthiness can give you insight into your clients. You can take a quick glance and see if they are relatively new, have a robust and established track record, or if they are going through a rough patch. Additionally, the creditworthiness of your clients can be an indicator of how quickly you will be paid for the invoices your issue after sales are made. A client with a high credit record is likely to provide timely payments on goods and services. A client with a lower score may take longer, or even ask for an extension. Others may be more troublesome, and receivables could age out of the payment schedule and end up going to collections – a situation no business owners wants to deal with.
Accounts Receivable Factoring and Creditworthiness
Businesses use accounts receivable factoring to get access to revenue faster than waiting on staggered payment schedules. Receivables are converted to cash within 24 hours, resulting in a stronger cash flow and the ability to build up reserves for growth. New Century Financial goes a step further, and provides business owners with the ability to check on the creditworthiness of their clients. Having this insight gives business owners an idea of which clients might become a risk with payments in the future, or which ones are in good standing and might be worth perusing for long-term accounts and larger sales.
New Century Financial is a national leader in accounts receivable factoring services. Our process is fast, transparent, and we allow business owners to decide which receivables or parts of receivables get factored. There are no long-term contracts, and we provide the tools necessary to check up on the creditworthiness of your clients and plan for long-term success. Contact New Century Financial today to get started.