If you’re tired of waiting anywhere from one month to three months for your customers to pay their invoices, you may want to consider invoice factoring as an alternative. When you have to wait that long for incoming revenue, it can cause serious disruption to your cash flow, and it can be very difficult to pay all your business expenses on time. Here’s how invoice factoring can help relieve this situation for you, and restore positive cash flow that will keep your business operating smoothly.
How Invoice Factoring Works
One of the great things about invoice factoring is that it’s not a loan, so you never have to pay any money back. Instead, you can sell some or all of your monthly invoices to a factoring company, and get a lump sum amount of cash right upfront, so you don’t have to wait for those invoices to be paid by customers. When you sell the invoices to a factoring company, it becomes their responsibility to collect on the invoices, and all you have to worry about is how you’re going to spend the money you received. After your customers pay the factoring company the number of their invoices, you would receive the difference between whatever the factoring company originally paid you, and the full amount of the invoices. The factoring company would subtract out a factoring fee, and the rest of the money would be remitted to your company.
Benefits of Invoice Factoring
Getting fast cash in your hands can make all the difference between staying solvent and going out of business. With improved cash flow, you’ll be able to meet expenses on time and maintain good credit history for your business. You also won’t need to have a stellar credit history, because any factoring company will be more interested in the credit-worthiness of your customers, rather than your own good credit. You won’t have to put up any collateral in order to secure a factoring arrangement with the company, because the invoices themselves serve as collateral to the factor.
Considering Invoice Factoring for Your Business?
If so, we’d like to hear from you because we may be able to collaborate with you on invoice factoring. Contact us today, so we can discuss what’s involved, and how invoice factoring might be a real benefit to your business.