If your business is having cash flow problems and having trouble paying the bills, factoring invoices may be the answer. Many businesses turn to factoring companies as an alternate source of funding and here are five reasons why:
1. Factoring invoices creates no debt
As opposed to loans or asset-based lending, invoice factoring doesn’t create any debt because it’s not a loan. A factoring company purchases your open invoices and they give you a sum upfront for them. Factoring companies will pay up to 95% of the value on the invoices and takes on the billing and collections responsibilities. Once your customers pay their bills, the factor will return the remaining ten percent to you, minus their factoring fee.
2. You have the control
You choose how many invoices to factor, when, to whom, and what you will do with the money you make from selling your receivables. This gives you flexibility and the ability to choose when and if you need to factor, as well as how many invoices you want to factor. You can even factor a single invoice.
3. Fast funding for small businesses (well, businesses of any size)
Factors usually give you the cash for your invoices within 24 hours after your business has been approved. A bank would take much longer to approve your application and transfer the funds.
4. Your credit history doesn’t matter
Factoring companies look at your customers’ credit-worthiness since they’re the ones who will be paying back the factor, seeing as the invoice is for bills they owe. If you need to improve business cash flow, you won’t be denied due to past financial difficulties or lack of credit history.
5. Invoice factoring can save you money and time.
Factor Finders works with a nationwide network of factoring companies. Our factoring broker service will pair your company with a factor company that has specific knowledge of your industry and will be familiar with your field and needs. They provide money-saving services and account management programs which enables you to get back to running your business. Since factor companies take over the billing and collections process, they free up time and energy that you’d have otherwise spent dealing with outstanding invoices.