Running a business is a lot of work. For small businesses and entrepreneurs, it can be difficult to find out all the options you have for financial management and handling cash flow issues during gaps between invoicing and customer payment. Factoring of invoices, or selling your invoices to a factor, can be an excellent way to address this issue and several more.
To see how factoring of invoices can help your business, it is important to consider more than just the advantage of addressing those invoicing and payment gaps. There are at least four other advantages businesses need to keep in mind when comparing this service to other options you may have.
No Need for Collecting from Slow Payers
Sometimes even really good customers are poor at paying on time. This means that your company is constantly having to follow up with their company and keep trying to get that payment in within at least a few days of the terms.
When you choose factoring of invoices through a top factor, they will literally take over your receivables management for the accounts they acquire. This removes all the stress from your staff, and you have the funding without the wait.
Get Working Capital in Days
With a top company factoring of invoices from application to cash in your business account is typically a few days. With a bank loan, small business loan or even having to go through the personal guarantee process this can take weeks to complete.
No Need to Go Through the Bank
In addition, the time delay difference in the factoring of invoices and going through a bank, the bank route is a lot more complicated and complex. It requires more time to prepare financial information, and this is time you have to spend away from finding new customers and growing your business.
When you use a factor the business credit score is not considered, but rather the creditworthiness of the clients are considered. This means businesses that can’t get a bank loan can easily qualify for factoring based on their customer’s repayment history and creditworthiness.
Addresses Immediate Opportunities
An often overlook benefit of factoring of invoices is the ability to move very quickly when opportunities arise. Accounts receivable can be converted into the cash you need to hire new employees, buy material, supplies or equipment and move to take on new work as it occurs.
With all the advantages of factoring of invoices, this is an option for funding that businesses need to consider seriously. It is fast, effective and very user-friendly, something that is not the case for other business financing options available.
