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How to Succeed at Borrowing and Other Money Secrets


About Me

How to Succeed at Borrowing and Other Money Secrets

If you're borrowing money, you need to be smart and strategic about it. If you use loans to your best advantage, they don't lock you in debt. They help you, your family or your business grow and thrive. Hi, my name is Jess, and I love finance. For some reason, it just comes naturally to me. I handle the books at my business and also help my friends with a lot of stuff. I even volunteer at my local library helping seniors with their finances. This blog is going to contain facts, secrets and ideas about money and finance. I hope that you like my posts and that they help you prosper financially!

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Turn Unpaid Invoices Into Cash With These Five Ideas
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Unpaid invoices disrupt your operating budget. Ins

Turn Unpaid Invoices Into Cash With These Five Ideas

Unpaid invoices disrupt your operating budget. Instead of having working capital, you have a pile of unpaid bills. While it can be challenging, there are ways to turn your unpaid invoices into cash. Take a look at these ideas:

1. Institute late fees and penalties.

If unpaid invoices are a regular problem for your company, it may be time to institute late fees and penalties. Call all of your clients with outstanding balances, and let them know that from now on, you will be charging late fees after the bills are late. That phone call may convince a few people to pay their invoices before they get any older and incur any fees.

If you prefer sweetness to strictness, take the opposite approach, and offer clients who pay in advance a small discount. It doesn't help turn your existing pile of unpaid invoices into cash, but it encourages future clients to pay quickly, helping you avoid unpaid invoices in the future.

2. Offer settlements.

If you have unpaid invoices that you have virtually given up on, consider calling these clients and offering them settlements. A settlement is when you agree to absolve the debt for less than is owed. For example, you might offer a client with a year old invoice the chance to erase the debt by paying just half or three-quarters of it.  

3. Remember to subtract unpaid invoices from your income on your tax return.

If you use an accrual method of accounting, you add up income as it's promised to you rather than when you actually receive it. However, when you report your income to the Australian Taxation Office, you need to remember to subtract the value of your unpaid invoices from your accrued income amount.

If you fail to subtract the unpaid invoices, you will have an income on paper that is higher than it is in reality. As a result, your tax bill will be unnecessarily inflated. However, you can avoid that by remembering to take your unpaid invoices into account. This does not directly put money in your pocket, but it helps save money.

4. Consider factoring.

Factoring is when you give your unpaid invoices to a third party collection agency. You continue to own the debts, but they attempt to collect them on your behalf. In the meantime, you can borrow cash from this company.

As they collect money from your clients with outstanding debts, that money goes to cover the cash you have borrowed as well as interest.

5. Sell your invoices to a collection agency.

In lieu of working with a factoring company, you may sell your unpaid invoices to a debt collection agency. They pay you cents on the dollar, and then, they own the debts. As a result, they get to keep whatever they collect.

This is often a more straightforward transaction than working with a factoring company. You simply get the money you need upfront, and you don't have to worry about whether or not the agency is able to collect anything.