Authored by Phil Cohen
Running a successful small business is hard work. From hiring and training staff to handing all the financial aspects, it’s exhausting to work day in and day out to better your company. But what if there was a service that helps you steady your cash flow, make payroll and cover other business expenses that are difficult to pay. Well, there is. Let’s talk about how invoice factoring can improve small business.
Interested in How Factoring Can Help Small Business?
One can’t figure how invoice factoring can improve small business without understanding first what invoice factoring is.
What is Invoice Factoring?
Invoice factoring is the process of selling your business’ unpaid invoices to a factoring company in exchange for a cash advance.
There are hundreds of factoring companies to choose from. Some specialize in a certain industry, such as trucking, construction or staffing, while others may not have a specialty, but offer additional services to their customers like back-end help or billing assistance.
How Does Invoice Factoring Work?
- Serve your customers – You provide goods and/or services to your customers like usual.
- Submit invoices – You submit the invoices you wish to factor to your factoring company.
- Factoring company verifies the invoice – The factor verifies that your product was delivered and/or service was performed.
- You receive a cash advance – The factoring company advances you the cash within 24 hours.
How Can Invoice Factoring Improve Small Business?
Invoice factoring can help small business in a variety of ways.
Use invoice factoring in place of a bank loan
Getting a bank loan may be the traditional way to receive funding as a small business, but it’s not always easy to secure one.
Bank loans require extensive documentation of your business’ funds, your company or personal credit score, and much more. If your business does not meet all of the qualifications, you do not get approved. Even if you do get a bank loan, businesses must pay the loan amount back with interest, and the interest rates can be very high. Bank loans also add debt to your books, unlike factoring.
Use invoice factoring if you don’t have perfect credit
Having a less-than-fantastic credit score can really hurt a small business’ chance of getting a bank loan, a private loan or a line of credit. With invoice factoring, your credit score doesn’t matter.
One way invoice factoring can improve small business is by deciding a company’s approval based on the credit score of their customers. Say you have an unpaid invoice from a big-box store and ask Factor Finders for a free, no-obligation online quote. The credit of your big-box store customer is the one that will be checked and assessed, not yours. Bad or no credit is not an issue with invoice factoring.
Use invoice factoring to get your own money, faster
Small businesses oftentimes work with customers who pay on 30, 45 or 60+ day terms – which is not ideal for the small business owner.
Invoice factoring can help with that. The cash advance received from invoice factoring is already yours, you’re just receiving it faster.
Use invoice factoring if your business doesn’t want to deal with minimums or long-term contracts
Another way invoice factoring can improve small business is by offering funding with no minimums or hidden long-term contracts.
A small business may not consistently meet certain required minimums for other funding sources, leading to problems securing funding. And if funding IS secured, often it cannot be kept due to these minimums. But small businesses can’t get out of the long-term funding contract they signed either, so they are stuck dealing with penalties beyond what they can handle.
With invoice factoring, there are no minimums, no hidden long-term contracts AND no maximum, meaning if you are meeting and exceeding your sales goals, more funding can be provided.
Use invoice factoring to cover any business expense
Other funding sources put restrictions on what a small business can and cannot do with the capital they receive. Invoice factoring does not. Use the funding to cover almost any and all business-related expenses your company may have. The money you receive from invoice factoring is your money, after all, just given to you faster!
Use invoice factoring if you need fast funding
Invoice factoring can help small businesses by providing fast, secure funding without the hassle of banks or loan offices. Once approved, your small business can receive funding in as few as 24 hours.
How to Qualify for Small Business Invoice Factoring
- Have a small B2B business that is currently in operation
- Have unpaid invoices from your customers
There may be more qualifications for invoice factoring depending on which funder you’re working with – but Factor Finders can help your small business navigate this terrain.
How Factor Finders Can Help Businesses with Invoice Factoring
Consider Factor Finders a factoring matchmaker. We learn about your business and its needs, then match you with one of our partner factoring companies that best fits your small business.
Factor Finders has longstanding, personal relationships with the factoring companies in our network, which means working with us ensures you get attentive, exceptional care from the factor you work with. Plus, finding a factor on your own is a time-consuming task, and everyone in the small business world knows that time = money.
So to save money, save time and get the best invoice factoring service – work with us!
How to Get Started
All you have to do to start is contact Factor Finders, either by calling or by filling out an online form. We have factoring specialists ready to answer any questions you may have about using invoice factoring to improve your small business.
