The Benefits of Invoice Factoring
Is your business struggling with low cash flow and cash gaps throughout the year? Consider using factoring for a convenient way to smooth over gaps and fill in rough patches in your finances. Whether you own a small or large business, this competitive tool can help you overcome your cash problems and create a thriving and successful business.
One of the biggest benefits of invoice factoring is early payments. With more than half of all small businesses struggling with financial issues due to late payments, early payments can give your business a competitive edge. This strategy works by selling your account receivables to another company. This company can then pay you a discounted rate immediately.
Don’t let lengthy invoice periods keep you from paying your monthly bills. When you bill a business, you can expect to wait on a check for as long as 90 days. Three months’ rent and operating expenses can cripple a small business. Although you’ll have to pay a percentage of the overall invoice, factoring allows you to get paid in a few days and turn over all responsibilities to another company. Not only will this give you quick cash, it’ll also relieve you of the task of tracking down payments. If a customer is late or hasn’t paid yet, it can be time consuming and difficult to wait for a payment.
Factoring typically doesn’t require a credit check. If your small business is just starting out and doesn’t have a solid business credit score yet, it can be difficult to secure a business loan in order to cover a cash gap. Using this type of financing is not only available for businesses with low credit scores, it’s also typically risk-free. You usually don’t have to use any collateral other than the invoice itself.
Unlike invoice financing, which sometimes has additional fees and is considered to be a loan, using this invoice strategy doesn’t include any interest on the invoice. You’ll want to check for any hidden fees or contracts, as some financing companies will require you to sign a lengthy contract and request more invoices.
Whether you need a small boost to get over a financial hill or are looking for a long-term strategy to receive quicker, more convenient payments, consider using this excellent invoice strategy. There are lots of ways to solve your cash flow issues, but few are as fast, efficient and hassle-free for you and your business.