The Benefits of Invoice Factoring
Invoice factoring is one of the best ways for a business to maintain good cash flow, given the fact that you don’t have to wait for customers to pay on their invoices, but you instead receive upfront cash for those invoices. That money can be put to any good business use, to help purchase inventory, pay for monthly expenses, manage payroll, and even invest in the business so as to foster growth. When you participate in invoice factoring, the factor becomes responsible for collecting on the invoices, while you have money in your hands to keep the business running.
Advantages of Factoring
As opposed to applying for a bank loan, factoring can be arranged much more quickly. Most businessmen are aware that a bank loan can take anywhere from a month to several months before you actually have cash in hand. And that’s assuming that you get approved for the loan in the first place, which is by no means guaranteed. In fact, the vast majority of applicants must be turned down by banks these days, because of stringent approval criteria which are in place.
Your chances of being approved for invoice factoring are much greater than being approved for a bank loan, primarily because your credit history is not really critical to the process. Instead, the creditworthiness and prompt payment history of your customers is much more important to any factoring company. When you don’t need to collect on invoices all the time, you can allocate your employees to more important business functions, rather than having to send out collection notices and make phone calls to customers.
Once you’ve established a relationship with a factoring company, you can have cash in your hands in a matter of days, and that should improve your cash flow situation tremendously. Rather than waiting for slow-paying customers and having capital tied up, you’ll have cash on hand quickly, so you can meet the needs of your business, and not be waiting for incoming revenue all the time.
Would Factoring Help Your Business?
For many businesses, invoice factoring can be a way to establish positive cash flow, and keep the business running smoothly. Contact us at Advanced Commercial Capital to learn how factoring can help your business with cash flow, and to continue growing.