7 Advantages of Invoice Factoring for Small Businesses
Working capital is important. If your business needs working capital to fund growth or cover costs, you may want to consider invoice factoring. With this type of factoring, a company will fund a cash payment immediately on an invoice amount. They will then collect payment from the customer and provide you with the reserve balance minus a fee. Below are some benefits to consider.
Quick Access to Cash
One great advantage of factoring your invoices is that it gives you quick access to cash. The factoring process is easy and fast, and you will typically receive your funds within 24 to 48 hours of approval. The initial setup usually takes anywhere from five to 10 days, which is quite fast as compared to the weeks or months it could take you to get a traditional loan.
Another benefit of this type of factoring is that it comes with flexible terms. In many factoring programs, there are no minimums, maximums or long term contracts. You can choose what invoices to factor and how often you do it. Typically, your access to funding goes up with your sales.
Reasonable Fess and Costs
Invoice factoring also comes with reasonable fees. The costs associated have gone down over the years, which is a plus. The fees will vary depending on the industry, customer creditworthiness, number of invoices and the amount of time it takes your customers to pay.
Debt Free Cash
Another excellent advantage to consider is that you will have access to cash without being in debt. That’s right – because factoring isn’t a loan, there will be no liabilities added to your balance sheet. This means that you will not have monthly loan payments.
An Option for all Credit Scores
If these reasons have not convinced you to try invoice factoring, you should know that strong financials do not matter for approval. Your credit doesn’t need to be great, you do not have to have a lengthy strong financial history it does not matter how long you have been in business. The factoring company will simply look at how well your customers have been paying on invoices.
With this type of factoring, you also get to stay in control. After all, you are looking for cash rather than someone to boss you around. Factoring companies will not dictate how you utilize the funds, allowing you to have freedom.
Finally, invoice factoring can be a major stress reliever. You will no longer have to wait for your customers to pay for you to cover costs. Consider these great advantages and opt for factoring your invoices today.