If you want to improve your cash flow and run your business more efficiently, invoice factoring is a creative type of business financing that you should try. This is a way for businesses to get the working capital they need very quickly and without having to apply for a traditional loan.
How Invoice Factoring Works
With invoice factoring, you work with a factoring company or factor. The factor purchases your outstanding invoices from you at a discounted price. This gives you immediate cash and saves you the trouble of having to collect payment from your clients. You deliver your products or services as usual and your customers pay the factor. Not only do you get paid right away but you don’t have to deal with collections. It’s a simple type of business financing and one that provides you with many advantages.
Benefits of Invoice Factoring
In the past, if your business needed additional cash, the most common solution was to apply for a business loan. Traditional business financing, however, has gotten quite a bit harder in recent years. Invoice factoring offers you another possibility.
- Alternative Financing – It’s an alternative for companies that have trouble getting traditional financing. Newer businesses and those with imperfect credit who might be denied a loan can be eligible for factoring as long as they have customers who order from them consistently.
- Immediately Paid – With invoice factoring, you get paid immediately. The process is faster than with traditional financing. Very often, you have the money within 24 hours of applying.
- Up Front Cash – With factoring, you get cash up front that you can use for any purpose. You can use the money to fulfill orders promptly, invest in marketing, hire additional staff, or upgrade your equipment. Best of all, you have additional capital without taking on new debt.
- Business Growth – Helps your business grow faster. Lack of cash flow holds back many businesses. If you’re constantly waiting for customers to pay, it’s hard to expand, upgrade your services, or invest in additional inventory. Invoice factoring is a way to upscale your business without a loan.
- Saves Time – Saves you the time and trouble of collecting payments. Your employees can focus on more productive tasks as the factor is responsible for collections. This frees your time and alleviates stress as you don’t have to chase people for payments.
Invoice Factoring: A Fast and Efficient Solution to Cash Flow Problems
In challenging economic times, many businesses struggle with cash flow. This can be an ongoing cycle as your own customers may have their own cash flow problems, making it hard for them to pay you on time. Lending institutions, meanwhile, are getting stricter about offering loans. You may be denied a loan, offered too little to meet your needs, or given a loan with unfavorable conditions.
Our invoice factoring services can help your business meet its cash flow needs and reach its true potential. To find out how you can get paid in 24 hours, get started here.