Beyond the “get-your-money-fast companies," there are some other options for turning receivables into cash.
Use Capital Dollars – That capital account you have that is mostly used for equipment can also be used to fund your accounts receivables. This takes the outstanding A/R off your books but does require fancy bookkeeping to recoup the money—you must make every attempt to repay the dollars to your capital account.
Use Officer Accounts – This is more of a paper-to-paper option to make your balance sheet look more attractive. Most likely you have paper dollars, stock, or office accounts that have positive numbers. You can use these officer accounts to wipe out your accounts receivables, but getting this “paper" money back is often difficult if you don’t stay on top of it.
Pension Plans – Some pension plans can be set up so the administrator of the plan can invest into just about anything, even accounts receivables. Ask your accountant first before you do this, but you can buy out the receivables as an investment and then charge the company a fee on top of re-funding the pension plan once the receivables come in.
Your best bet is to follow some accounts receivable best practices and offer options to your customers such as electronic payments, credit card payments, and even payment plans (make sure to charge interest for those payment plans).
As a small business owner, it’s often best to face some realities when looking at your aging accounts receivables, especially the ones that are over 121+ days past due. If you can’t collect the money, you may want to consider it an expense or a loss in your allowance for doubtful accounts.
All businesses seem cash poor these days; however, for the small business owner, often it’s not the best to consider conversion companies. Instead, be prudent about your charge customers. Make them fill out credit applications or even sign personal guarantees so if they don’t pay, the signee can be held personally responsible—more and more companies are using this practice.
When considering what are the options for converting accounts receivables to cash, use smart business sense and don’t let them get out of control in the first place.
Image Credit: (Freedigtialphotos)