Outsourcing Accounts Receivable

Giving customers credit is one way to get them to buy more stuff from you. Buy something at any department store or large chain retailer and you will probably be asked whether you'd like to open a store credit card.

However, funding customer credit can be expensive and comes with the risk of getting paid late or never getting paid at all - which can break a small business.

A new web-based service called FTRANS lets small and midsized companies whose customers are other businesses (not consumers) outsource their accounts receivable system. Created by John Hayes, who also created Peachtree Accounting software, FTRANS helps small businesses offer credit to B-to-B customers similar to the way credit card companies let retailers offer credit to consumers.

Here's how it works. You make a sale to your customer, and enter their information into the online FTRANS Trade Credit Express system for instant credit approval (or denial). Once that customer is approved, you enter the invoice details into the system and send the invoice to the customer. Payment is deposited into your bank account within 2-4 business days, and any follow up and collections are handled by FTRANS. See http://ftrans.net/tce/ for a demo.

There is no fee to the customer, and fees to the business owner range from 2-2.5% - similar to accepting bank credit cards. Customers get free and flexible credit, you get the benefits of accepting a credit card.

Laura Leites, Assistant Editor, Smallbiztechnology.com

tags: accounts receivable , credit | 0 comments