Whether your company is just starting up or well established, access to working capital can be an issue. Slow paying customers, long payment cycles, and limited bank credit can all contribute to a lack of funds. Invoice factoring, also known as A/R financing, lets your company bridge this cash flow gap and be ready to grow your business.
#1: Instant Cash Flow
Factoring invoices gives you the working capital you need, without the wait. You provide the service and issue the invoice. Once the invoices are verified with your clients, the lender will advance 80-90% of the value the same day, turning your unpaid invoices into cash. Having access to instant cash allows you to take advantage of things like early pay incentives from your vendors, new opportunities, and more.
#2: No Debt
Because you have already provided the product or service, there is no additional debt to incur. You are simply getting an advance on money that you have already earned. There is also no impact on your credit score. In fact, your score may even improve as a regular source of cash flow improves financial stability, making it easier to make payments on time.
#3: Faster Growth
The ability to increase your cash flow as needed enables your company to expand and be ready for growth opportunities as they come your way. For example, in this current economic climate some companies have pivoted to provide PPE and other supplies as consumer demands have shifted. Having this lending facility in place allows your company to adapt quickly.
#4: Ideal Alternative to Bank Financing
If your company is in a turnaround position, has a limited operating history, or is conducting business in a down industry, your bank may turn down your request for financing. In tough economic times, the bank may even put your existing credit line on hold. Invoice factoring can be used alone or in some circumstances alongside an existing bank loan to keep your cash flow moving.
#5: Back Office Assistance
No more collecting payments from customers yourself. Invoice factoring includes customer credit review, invoice collection services and online reporting, freeing you up to work your business.
#6: Shorter Cash Cycles
Slow paying customers or long accounts receivable cycles could mean waiting 60-90 days to collect. Invoice factoring gets the money into your hands quicker, allowing employees to be paid on time, meet seasonal demands or purchase new inventory.
Invoice Factoring – A Time-tested Solution
Invoice financing is a straight-forward financing solution that grows as you do. The financing available can go up or down based on your needs, and is based on your customer’s ability to pay, not yours. Use it when you need it; stop and start on your own terms. It’s the only form of financing that truly grows with your sales.