It’s not all negative

Negative cash flow is not necessarily a bad thing; it could be a sign of much-needed investment in the future (a new machine, even new property).  Coming out of lockdown, it could also mean that orders are coming in, raw materials being purchased, and new people hired, but bills are not yet being paid.  That’s maybe happening to you, but it’s probably also happening to your customers.  Can you help them while still looking after yourself?

A helping hand?

What if you could allow your customers an extra 30 or 60 days late but still get paid on time yourself?  If you could, they’d thank you for it, whether that means more orders now or a closer relationship into the future.  Wouldn’t it be great if you could do this and your competitors can’t?

Too good to be true?

It may sound like it, but now there is a way in which you can help your customers stay positive about being negative – you can say “yes” to customers who want longer to pay their invoices, whilst meaning “no”. We have a new product called Corrivo Extended Payment Terms which suppliers can offer their invoices.  The customer gets longer to pay, but your business still gets paid on time.  Yes, they can have longer to pay, but no, you do not have to suffer and nor does your DSO.  How? Effectively, you are offering your clients a way to buy more time, but not, strictly speaking, from you. You offer the customer the chance to sign up for Corrivo Extended Payment terms and pay around 1% interest per month on their invoice amount for up to 60 extra days. They then commit to paying Corrivo Pay Ltd the full amount plus the interest at the end of the extended term. Corrivo Pay Ltd pays you on day 30 when your invoice was due, but the customer has longer to acquire the cash inflows to pay the invoice Corrivo Pay Ltd collects the amount by Direct Debit on the newly arranged due date.

You should see the other guy!

So how will it work for your customer?  If they are spending on raw materials and people but want to pay their bills on time, they might pay via a payment card or a credit card.  They could even use Buy-Now-Pay-Later finance or PayPal credit.  Any of those mean an APR of around 2% per month and a financial debt that negatively impacts on your customer’s credit rating (which is like using a sledgehammer to crack a nut, only it’s not just the nut that gets damaged in the process).  Corrivo Extended Payment Terms would give them a lot to be positive about – half the interest rate and no financial debt.  You may even decide to fund the interest cost yourself – it could be a small price to pay for the extra sales you get from being the only supplier able to offer 90-day payment terms.

The technical bit

How is this possible? Technically, the Corrivo solution is a non-financialised form of lending based not on the value of the lending and the risk associated with the debt going unpaid. The Corrivo Extended Payment Terms solution is based on a positive expectation that out of thousands of invoices issued every day, only a few will default or be paid late. The risk analytics is based on dilution: there is a greater likelihood that it will all go right than it all going wrong.  So, you see, if you or your invoice customer is cash flow negative, look on the bright side – you could be using Corrivo Extended Payment terms to get paid on time, every time, whilst giving your customers longer to pay  – and at no extra cost to you, at less cost to them than other known alternatives, and with far less effort. Come swiftly to their aid and be there at the point of need. You can help your customers and still maintain a first-class Accounts Receivables function.

Don’t get me wrong

We’re doing something new, which means it’s easy to make the wrong comparisons with other products.  Corrivo Extended Payment Terms isn’t Supply Chain Financing, which helps some of the biggest companies in the country extend payment terms to their Suppliers.  We’re also not Factoring, which may help you get paid early but doesn’t help your customers.  We think that we’re new and we’re doing something different, but we’ve got an old head on young shoulders (or it the other way around?)  Data Interconnect has been a leader in AR invoicing for over a decade, and the financing for Corrivo Extended Payment Terms comes from two of the world’s largest financial institutions: a major investment bank and one of the country’s biggest insurers

 

David Harris

Author David Harris

David Harris is the Business Development Executive at Data Interconnect. Dave works with companies planning the implementation of Corrivo, the cloud-based credit control software which improves cashflow, minimises aged debt and streamlines processes for finance departments. If you would like to know more, contact Dave on: Davidh@datainterconnect.co.uk

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