Baltimore Legal Practices: Maintaining a Strong Cash Flow
Baltimore legal practices of all sizes are moving away from standard debt-based financing sources. In order to maintain a strong cash flow and eliminate outstanding client invoices, Baltimore legal practices are turning to factoring services.
Staggered Payment Schedules
Baltimore legal practices have receivables that work a bit differently than other industries. Some practices only issue invoices after cases have been won. Others have clients who retain legal services in perpetuity. Still other legal practices issue invoices like any other business, so clients for services rendered, usually with aging windows of 30 days or longer. For Baltimore legal practices, especially newly established offices, the lag created by waiting period can create a strain on finances. In the past, many legal practices have turned to short-term loans to cover any gaps in working capital. Unfortunately, short-term bank loans can add up to long-term debt, and if the same cash flow issues recur, then they are compounded by lowered credit ratings and liabilities.
Baltimore Legal Practices Use Factoring Services
Legal practices in Baltimore, MD are taking advantage of factoring services to not only correct cash flow issues, but to prevent them from happening in the first place. Factoring is much less complex than traditional loans, and does not place any debt on the books. Factoring is the process of submitting unpaid invoices, which are then converted to cash, usually within one business day. This allows Baltimore legal practices to see a quick turnaround on unsettled client accounts.
Eliminate the Need for Collections
Because of how fast and efficient factoring is, open invoices do not get a chance to “age out.” Typically, when an invoice remains unpaid past its staggered schedule, local legal practices need to perform collections. However, collections can add up to six weeks before payment is received, from the time the process starts. Since factoring automates accounts receivable, practices can submit client invoices as they are generated and receive cash within 24 hours. Clients still have to make payments according to the staggered schedule, but on the back end, legal practices experience an improved cash flow and preserved credit ratings. Factoring reduces the reliance on debt-based loans, and allows offices to keep up with payroll, overhead expenses, and allows legal practices to build up revenue for growth and advertising.
Source Commercial Funding provides the most comprehensive factoring services in Baltimore, MD. Contact our offices to get started today.