Many businesses need outside financing to stabilize their cash flow and spur further growth. However, some companies are unnecessarily timid about factoring in their accounts receivables. This caution comes from being unaware of the advantages of this form of funding. Here are some of the reasons that you should not be afraid of invoice factoring.
Strengthen Cash Flow
One of the main benefits of factoring your accounts receivables is the freeing of funds that are otherwise tied up in unpaid invoices. Instead of waiting weeks or months to get paid, you can have that cash right away to use for employees’ salaries, inventory, equipment, and the taking on of new orders.
Receive Financing Even with Imperfect Credit
Obtaining a bank loan is almost impossible unless your company has been in business for a long time and has a superlative credit rating. In contrast, factoring companies are more concerned with the credit ratings of your clients than of your company, and they will work with you even if your business is fairly new.
Your Commitment Can Be Long or Short-Term
Many factoring companies offer short-term contracts so that you can try out this form of funding and see if it suits your company’s needs. If factoring works well for your business, you can then sign a long-term contract for lower fees.
Obtain Terms That Suit Your Industry
With factoring, you can generally customize the terms to fit your business model. You will likely be able to find factoring companies with terms that are already specifically suited for the needs of your industry.
Since the factoring company takes over the communications and collections of the accounts receivables you have factored in, you no longer have to remain occupied with these details. Instead, you can focus on improving your products and services and growing your company. Additionally, you can have constant online access to monitor the details of your account, including the payment status of the invoices you have factored in and the number of funds currently available.
For more advice on invoice factoring, contact BT84 Commercial Capital & Business Solutions.