The Financial Challenges Facing Cleaning Companies
Commercial cleaning companies faced an increased workload over the past four years, and with it, the need for more cleaning staff. In a twist of fate, this additional business often puts a strain on the cleaning companies cashflow – having to spend out on extra expenses before the increased income begins to flow through. Added to this, some clients can be slow to pay their invoices because of their own cash flow pressures, adding additional strain on already tight budgets, and making it difficult to meet financial obligations for the cleaning companies themselves. Employees of cleaning companies tend to be paid on a weekly basis. However, the company itself can receive payment on their invoices from 30, 45, or even 60 days after the works have been carried out. Adding additional strain to cash flow.
Financial challenges
Cleaning companies do all they can to stay afloat during these challenging times, but still face financial challenges such as:
- Increased Workload. An increased workload is great for any business but only if they have the capacity within their available cash flow to maintain that growth. If they don’t have a healthy cash flow taking on additional contracts and increased workloads will have detrimental financial implications on their business.
- Extra Staffing Costs. Employing extra staff has a significant impact on a company’s cash flow. Paying salaries and other associated costs, quickly eats into the cash that is available.
- Additional Equipment. An increased workload and employing extra staff also mean you need extra equipment and supplies. Equipment doesn’t come cheap. Additional upfront costs can potentially make a dent in your available cash.
- Late Payment Issues. Another issue that cleaning companies are facing is late payments. Often clients will wait until the last minute to pay or go past the agreed payment date terms, putting a financial strain on the company causing further cash flow pain and making it difficult to meet day-to-day expenses. Often this is compounded where there is one large debtor accounting for the bulk of the business. With any form of overdue payment quickly putting significant pressure on the business.
- Poor Credit Control. Some small businesses find credit control to be a chore to fit into an already busy day. With raising invoices being just the start, from following up telephone calls, emails, letters, and monthly statements, chasing payments through to reconciling accounts and managing cash books … this equates to a lot of time. Employing the services of a fully outsourced credit control facility enables a business to concentrate on the actual business needs and growth without constantly trying to fit in time for productive credit control.
Help is out there
For cleaning companies that are struggling with cash flow issues, credit control, and chasing for late payments, there is the help! This comes in the form of Invoice Finance. Invoice finance is a viable option available to start-ups, small-medium businesses, and established enterprises, to assist them in maintaining a stable and healthy cash flow and in-turn increasing their working capital.
What is Invoice Finance and How Does it Work?
Invoice Finance is an alternative funding solution that allows businesses to access cash prior to receiving payment from customers. There are two main services within invoice finance (which will vary depending on provider) recourse factoring, and disclosed invoice discounting. Both services grow with the business, are methods to manage cash flow, increase working capital, and improve the businesses sustainable growth.
Recourse factoring facility includes sales ledger management, and cuts down the time strain of collecting payments yourself. Giving the business an additional financial department.
The truth about invoice financing is, it’s a wise choice for businesses seeking funding of up to £1 million. As the business grows, it keeps pace with its needs.
Entering into an invoice finance agreement is a proven way which allows businesses long term growth, and short-term gain. Appointing an accredited funder as your invoice finance provider is a big decision – one that’s worth taking your time on.
Rather than a sales pitch leading you into a “call to action”, we welcome you to our website here. Take your time to view what our clients say about us, and how our ethical funding values are at the core of everything we do.
