It is not uncommon for a company to face late payments from customers. That is why it is important to put in place a invoice tracking awaiting payment and don't hesitate to revive its customers.

When a company has cash flow problems, its first instinct should be to check whether certain invoices are waiting to be paid. Restarting your customers can trigger the payment of certain invoices and help the company to respond quickly to your cash flow needs.

It is important to act quickly to recover unpaid debts.

At first, it is usual to go through the amicable covering unpaid. The company can first do a telephone reminder and then send a reminder letter to their client asking them to pay the money they owe. If no response is received, the company may give formal notice to pay his client by registered letter.

There is also a simplified recovery procedure for claiming the payment of claims below €5,000. This procedure is implemented by a Commissioner of Justice. To learn more about this procedure, see the dedicated card.

If the amicable recovery has not been successful, it is possible to bring the matter before the court: judicial recovery. Several procedures can be implemented: order for payment, on interim provision or assignment for payment in court.

Negotiate payment terms between traders

When a company has a business relationship with business partners, the rules concerning applicable payment periods depend on the nature of the activity (food products or transport for example). These time limits are an indication of when the company must pay its suppliers or when its customers are expected to pay it.

In the event of financial difficulties and cash requirements, it is important to check the applicable payment deadlines. If these deadlines are insufficient, it is possible to request additional time to its suppliers.

Request a grace period

A company who has been summoned for payment may apply to the judge who has made an order additional period of 2 years.

This so-called "grace period" does not apply to all claims. For example, it cannot be granted for bills of exchange.

Similarly, a grace period cannot be granted for tax or social security debts. In this case, the company can contact the tax administration directly (for individual business or a business) and/or to the Urssaf to request payment periods. It may also use the Commission of Heads of Financial Services (CCSF).

To maintain a good control of its cash flow, a company must pay attention to the inventory management.

Indeed, it is important not to have a surplus or a shortage, because each of these scenarios can have a financial impact.

Excess inventory can have severe consequences on the company's cash flow, which can no longer cover its costs. The over-storage is expensive. When the volume is poorly controlled, this leads to fixed storage costs (buildings, heavy machinery, shelves) and variable costs (salaries, maintenance costs). These costs can weigh heavily on operating accounts. Moreover, over-storage unnecessarily ties up capital.

A contrario, a stock shortage can lead to lost sales and diversion of loyal buyers to competing sellers.

A company with cash flow needs can check that inventory management is optimal to avoid unnecessary expenditure or allow it to save money over a period of time.

The company has different banking tools to get cash quickly. Thus, several banking processes make it possible to assign business claims in order to obtain advance payment thereof:

• Factoring : the company assigns its outstanding business claims to a financing business called a factoring business for remuneration. For more information, see the dedicated card.
• Mobilization of professional debts  : the company assigns or pledges professional debts in order to obtain advance payment. It retains the management of its accounts receivable. For more information, see the dedicated card.
• Bank Discount : the company is giving up bills of exchange to a credit institution for immediate payment. However, it maintains the management of its accounts receivable. For more information, see the dedicated card.

A company with rapid cash requirements can unfreezing financial assets to various contacts:

• Close (family, friends): donations or loans
• Bank: bank loans
• Company: inter-company loans, credit-seller...
• Particular: crowdfunding, business angels...
• State: aid, assistance...

To learn more about different methods of financing, you can consult our dedicated file.

A business that needs to respond quickly to a cash need may ask its partners to provide equity capital. These contributions can be made in one of the following ways:

• Equity injection : the business carries out a increase in share capital either by increasing the value of the shares or by increasing the number of shares. Specific rules apply depending on the type of business, we present them in the dedicated card.
• Partner Current Account Advance : partners make funds available to assist the business in to meet its cash requirements. These advances operate as interest-bearing loans. For more information, see the dedicated card.