Improving Cash Flow for Technology Companies

The technology sector comprises a wide range of businesses, from manufacturers to distributors, software developers, storage, logistics, and solutions providers. Technology companies, whether they are B2B or B2C, typically issue invoices to their clients with payment windows of 30, 60, or 90 days. But how can technology companies shorten the time between sending invoices and getting money to maintain – if not accelerate – cash flow?

If technology is becoming faster, why are payment schedules still so long?

Technology businesses have enabled commerce to take place at a much faster rate, and e-commerce has allowed businesses to run regardless of the day of the week, or the time of the day. Despite these advances, invoicing still adheres to staggered payment schedules of 30 days or longer. 

The reason for this goes back to standard business practices established in the 20th Century. Invoices are issued with staggered payment schedules to allow technology companies to create a constant influx of revenue, while simultaneously allowing their clients to assess their purchases and gather the capital to pay the balance owed. On paper this works out very neatly, but in practice it can cause havoc with cash flow. 

How do payment schedules impact cash flow for technology companies?

When a client makes a purchase from a business in the technology sector, they are issued an invoice with a payment schedule of 30, 60, or 90 days. This means that the technology company may not receive payment for a month or more. During that waiting period, the business still has to fill orders, cover payroll and overhead, maintain or upgrade equipment, and other costs associated with keeping a business successful. If there are multiple invoices that are outstanding, then the technology business could easily find itself spending in excess of the payments they are receiving. The lag in payments creates a strain on cash flow.

Technology companies are debt-averse

There was a time when the answer to correct cash flow strains was to take out a loan. However, lenders have been tightening their credit and collateral requirements, making it more challenging to secure adequate financing. At the same time, technology companies do not want to take on debt to compensate for cash flow issues caused by unpaid receivables. Fortunately, there is a much faster, more efficient, and debt-free solution.

Invoice factoring for technology companies

Invoice factoring from New Century Financial allows technology companies to turn their unpaid receivables into cash within 24 hours. With no upper limits, businesses in the technology sector can choose which invoices, or parts of invoices, they want to factor, and we will make funds available quickly and efficiently. There are no hidden fees or long-term contracts. 

Our invoice factoring services accelerate cash flow so technology companies can accelerate cash flow, eliminate payment schedules, and build up capital for growth projects. Get started by connecting with New Century Financial today.