Authored by Phil Cohen
Companies that have used invoice factoring already understand the value of unlocking working capital to meet short-term cash flow needs. Factoring provides ready, flexible access to cash without added debt or interest, and it’s often ideal for businesses with uneven cash flow to meet their everyday operational needs. But if you’re focused on boosting margins and scaling your business for the long term, consider applying advanced factoring strategies.
The methods below can help your business capitalize on the benefits of factoring more effectively in 2024 and into 2025.
Why Factoring in 2024?
For small and medium-sized businesses especially, economic changes over 2024 (and the preceding five years, generally) have often made it more difficult to access credit. Rising costs and liquidity needs have compounded the problem, while increased competition in many markets requires companies to continue to offer extended payment terms. If you cannot afford to wait months for your accounts receivable to come in, factoring provides an ideal solution for gaining access to necessary cash.
It doesn’t require taking on new debt, yet still provides a way to achieve even cash flow for covering expenses, meeting payroll reliably, and acquiring new clients. In fact, the global market for factoring services is expected to increase with a CAGR of nearly 10% by 2030.
5 Advanced Factoring Strategies for 2024 and Beyond
Though invoice factoring is a popular solution for overcoming everyday business challenges, basic factoring strategies might not be enough for businesses to truly thrive in 2025. Maximizing the benefits of factoring today often requires more strategic approaches.
Leverage Factoring to Build Vendor Relationships
One of the main benefits of factoring, especially when compared to traditional forms of credit, is the speed with which you can access working capital. You can often unlock the value of your accounts receivable in just a couple of days, compared to the weeks or months it could take to undergo a conventional, underwritten loan – especially for SMEs, which may find it more difficult to qualify for financing.
Such a quick turnaround is especially valuable when you use it to strengthen your supplier relationships. Use invoice factoring to pay your vendors early, which not only improves trust and goodwill but could allow you to take advantage of discounts not available to payors with a net 30 schedule. Factoring your invoices gives you cash you can use to pay quickly and the savings could even offset your factoring fee while improving your supplier relationships.
Utilize Industry-Specific Factoring Solutions
Different industries have different needs, and a one-size-fits-all solution won’t cut it in 2024. Factoring can be tailored to every business, whether you’re in healthcare or manufacturing.
To maximize the benefits of factoring, work with a factoring company that specializes in the solutions you need in your industry.
Here are a few examples:
- Trucking Factoring: Get cash for your invoices and buy the fuel you need now to keep your fleet moving.
- Staffing Factoring: Meet payroll on time, every time, so you can attract and retain the talent you need for a successful business, even when your clients are on net 60 or longer terms.
- Manufacturing Factoring: You’ll never have to go offline because you have to wait to purchase materials. Keep producing efficiently by factoring your accounts receivable for the cash you need to keep the line moving.
Implement Non-Recourse Factoring to Minimize Risk
Recourse factoring (where you retain the risk of client nonrepayment) typically comes with lower costs, but risk remains higher for your business. By implementing non-recourse factoring, which shifts risk to the factoring company, you can sell your invoices without worrying about customer defaults. The factoring company aborbs the loss, not your business.
Non-recourse factoring can provide a crucial safety net in 2024, when your customers may be dealing with financial uncertainty and problems of their own, especially in volatile markets.
Maintain Flexibility with Spot Factoring
The beauty of factoring is that it is infinitely tailorable and customizable. While some factoring contracts require a certain volume of invoices or time period for factoring, spot factoring allows you to factor your accounts receivable as needed, so you can decide what benefits you most on a case-by-case basis.
Spot factoring gives you increased control over which invoices you choose to factor and is ideal for businesses with fluctuating cash flow concerns.
Switch to a Better Factoring Partner (Hint: Use a Broker)
Your choice of factoring partner can compound your problems or amplify your success. Whether you’ve already been working with a factoring company or you simply want to ensure you’re matched with the right partner for your business, a factoring broker can help. Working with a factoring broker offers a distinct advantage over navigating the process on your own, because they already have relationships with a multitude of factoring companies. That means they can streamline the process of finding the right match by connecting you with factoring companies that are experienced in your industry and that offer the solutions you need for your business.
The Bottom Line
At Factor Finders, our goal is to match you with the right factoring company so your business can thrive. We know the factoring market inside and out, and we tailor our recommendations to your specific needs. And because we’re a broker, not a factoring company, we’re able to offer objective, expert advice, too.
With our ultra-fast response times and wide network of specialized factoring partners, Factor Finders helps you navigate the complexities of factoring and unlock the full potential of your working capital in 2024. Contact Factor Finders today and get connected to the right factoring company fast.