At some point, every business owner needs financing. There are plenty of options to consider, and it is important to find one that works best for you. Invoice factoring is a great way to provide capital and increase your cash flow quickly and efficiently.
How Does It Work?
Factoring is a form of financing that is simpler than traditional loans. It allows you to skip the process of collections by selling your unsettled invoices at a discounted price for cash upfront. Transactions will carry on as usual without the hassle of collections, and you will receive financing without the wait of loan processing.
In times of financial struggle, this is a solution that can benefit both you and your customers. Once the factor purchases your invoices, it is responsible for collecting payment, and you have the cash to put back into your business.
What Are the Benefits?
In comparison to more traditional business financing solutions such as loans, which typically require perfect credit, leveraging your accounts receivables presents several advantages:
- Fast Cash. Cash is the fuel that keeps the business running. This type of financing provides you with the money you need without taking on debt, and you can use it to promote growth and increase future cash flow.
- Growth Opportunity. Cash flow is a crucial component of the growth and stability of any business. Having immediate cash in hand allows you the opportunity to invest in upgrades, fulfillment and staffing that will help grow your business.
- Alternative Financing. This product offers more lenient eligibility standards and can benefit those businesses that may struggle to get a traditional loan.
- Faster Processing. Payment is immediate. You can expect your money within 24 hours of applying because the process is also much faster than traditional loans.
- Time Efficiency. Handing off the collection duties to a company that factors also means less work for you. Your employees will be free to shift their productivity elsewhere.
Is It Right for You?
In recent years, it has become increasingly more difficult to get a business loan. Lenders have tightened their restrictions. You may not be able to get the loan you want or need, but if you provide products or services to your customers and invoice for payment, you would likely benefit from factoring. The things you need to meet the primary requirements are a business in good standing and creditworthy customers. You can avoid the waiting periods required by traditional loans and get the cash flow you need to grow and improve your business.