If you’re looking into financing solutions for your business, you may be considering invoice factoring, a process that lets you collect payment on invoices immediately, so you don’t have to wait for clients to pay. Factoring has been around for quite a while but there’s still a shroud of mystery surrounding it, at least for those who haven’t researched it. One area of concern that some businesses have involves the way invoice factoring affects customers. Let’s explore some common concerns so you understand the process a little better.
Will Factoring Invoices Make You Look Bad to Your Customers?
When you factor your invoices, it provides you with some immediate benefits. You get a cash flow boost and you no longer have to spend time on collections. However, you may also be concerned about how the whole process looks from your customers’ point of view. Will it make them think, for example, that you’re somehow untrustworthy?
First of all, your customers are mainly focused on getting good products and services from you. Where they send their payments is most likely not a primary concern. Those of your clients who are familiar with factoring will most likely be impressed by your business savvy. They’ll know that you were approved for factoring and that you’ve taken steps to maximize your cash flow. Factoring may also give your customers some extra breathing room as they may have more time to pay their invoices.
What If Customers Don’t Pay?
There’s always the possibility that a customer at some point either can’t or simply won’t pay. What happens in such cases depends on whether you’re doing recourse or non-recourse factoring. With recourse factoring, you are obliged to buy back any unpaid invoices. Non-recourse factoring, which carries higher fees, frees you of this obligation as the factor takes all the risk.
How Does Invoice Factoring Helps with Customers Who Pay Late?
One of the main benefits of factoring is that it helps you create steady cash flow, even when your customers are late with payments. It’s simply a reality of doing business that a certain number of customers are slow in paying. Without factoring, this threatens your cash flow and can impact your ability to meet expenses such as payroll, invest in inventory and pay other expenses.
When you factor invoices, you pay a small fee in exchange for the security of getting paid upfront for invoices. Factoring is a flexible financing option where you control many variables. You can factor some or all of your invoices. You can decide whether recourse or non-recourse factoring is best for you. You also can set up factoring on a timeline that works for you. For example, you may want to vary the number of invoices you factor from month to month.
How Invoice Factoring with Riviera Finance Works
Riviera Finance is one of the most experienced factoring companies in North America. Here’s a summary of how factoring with Riviera works:
- Become a client
- Choose which invoices you want to factor
- Deliver products or services to customers as usual
- Collect payment for invoices within 24 hours
- Customers pay the factoring company so you can focus on running your business
Riviera Finance has been helping businesses with financing solutions, such as invoice factoring for 50 years. Riviera offers quick delivery of funds, dependable services and maximum cash advances.
Contact Riviera Finance to see how they can help you with your cash flow needs.