Invoice Factoring vs. Small Business Credit Cards

Start-up money is essential, yet it’s sometimes difficult for small businesses to obtain. Banks have very strict lending policies requiring a proven financial track record. Small business credit cards and invoice factoring are two viable financing options for small businesses. 

Business Credit Cards Have Strict Requirements

There are plenty of traditional lenders that offer a small business credit card to entrepreneurs. Perks and rewards include cash back bonuses when a specific spending benchmark is reached. Or perhaps the credit card’s benefits would include an annual cash back bonus after hitting designated spending amounts in a number of different spending categories (i.e. office supplies, gasoline, lodging, and/or airline services).Additionally, small business owners can also use business credit cards to track their expenses overtime, manage employee spending, and protect against fraudulent purchases.

The perks can be beneficial, but require a large amount of due diligence on a manager’s part to stay aware of the credit card’s terms, interest rates, and payment due dates. Moreover, entrepreneurs should also know that a business credit card can be tied into their personal credit score.

Some small business credit card companies charge annual fees to use their credit cards, and they reserve the right to change rates without notice. Most credit card companies will also require business owners to pay the entire balance each month in order to be able to benefit from the rewards programs.

Invoice Factoring Is a more flexible financing option

On the other hand, accounts receivable factoring gives companies of all sizes immediate access to cash to meet operational needs. Specifically, selling their receivables to a general or specialized niche factoring company provides instant operational capital to companies, instead of waiting weeks or months to be paid. The initial approval process takes less than five business days to complete, and future fundings can occur happen in as little as 24 hours. 

Factoring companies advance cash based on your customers’ creditworthiness. In addition, minimal paperwork is required, and there is no debt added to your balance sheet. Advances range between 70-95%, and the balance is returned to you when your customers pays the factor.

Specifics about Factor Finders’ Invoice Funding Program

Factor Finders helps you find the best factoring firm to meet your company’s financing needs. We weed through all of the invoice factoring information so you don’t have to. Want to learn more?

Start factoring today! Call 1-855-FACTOR-1 to get started!