Six Things Your Competitors Know About Factoring

Are competitors growing rapidly, enjoying success, and just winning the business race? If so, it’s likely because they have flexible business funding to save money and time and mitigate their past financial and credit difficulties. How? Accounts receivable/invoice factoring enables a company to sell outstanding invoices so they can generate immediate cash. Sounds good, right? Here are six ways this invaluable service is helping industry competitors succeed.

1.Offers Quick Capital Access To Boost Cash Flow

Most businesses live and die by a calendar. While some customers pay their balances like clockwork each and every schedule, they are the exception, not the rule. A load of customers paying invoices 60 to 90 days late, if at all, is a heavy burden that eats cash flow. Bank and lender funding still means waiting weeks to months for that cash injection to keep the business from going further down a negative financial hole.

Factoring companies offer a strategic partnership to mitigate the above scenario. Up to 90 percent of invoice funds are secured upfront versus waiting on customer payments, which allows for that immediate access to capital for growth and development.

2.No Loan = No Debt

Any prudent business wants to avoid the dreaded ‘D’ word – Debt. In fact, a recent Federal Reserve survey found that over a quarter of small businesses don’t apply for funding because they want to avoid debt. It’s a gamble that some win and some lose.

In having some to all invoices factored, businesses completely bypass taking on unnecessary debt. How? It’s not a loan. The factor partnering company purchases receivables at a discount. The business yields a small fraction of profit in exchange for guaranteed, non-loan, immediate cash flow.

3.Rebuilds Credit

It’s an alternative to creating debt and frees up existing debt, but it’s also a strategy for businesses to rebuild credit and moot bad credit that’s disabling their funding options. How?

What’s the main influencing factor on a business’s credit score? Ding-ding for those that said payment history. Good credit hinges upon all accounts being up to date, and bad credit closes so many fundamental doors necessary for growth and development.

Yet, not all businesses have the free cash to bring all accounts current, and those with bad credit often don’t even qualify for traditional funding options. Help comes from invoice factoring’s ability to create the cash and flexibility necessary to fulfill those existing obligations to lenders and creditors, and its much easier to qualify for this service than traditional funding.

The credit score rises as the business is able to get the existing debt paid off the books and better manage current operating expenses to avoid more debt

4.New And Larger Orders Are No Longer A Problem To Solve

It’s a problem most every small business faces. They have demand, but they don’t have the free means to fulfill that demand; as a result, growth occurs at a snail’s pace.

Working capital tied up in accounts receivable ties the purse strings across every facet of the business, including paying and retaining valuable employees, investing in attracting new customers, and buying the components necessary to fulfill new and bulk orders.

With this invoice solution, businesses are enabled to grow at the demand’s pace. No more waiting months on payments from existing clients to fund today’s moves. With factor cash already in hand, businesses are ready and able to say yes to make big moves, such as large orders, expansion facilities, and employee recruitment and retention.

Plus, this solution often comes with free customer credit checks that can help businesses make more strategic decisions on bringing in the highest quality new customers.

5.Say Goodbye To Time Leeching

In-house accounts receivable tasks are tedious. They’re time leeches hooked to the past that could be better spent focused on the now and future. With a factoring partnership for invoices, administration and employees are freed from back-office tasks like payment progression, record keeping, and collections in regard to all the invoices that have been factored over. This service is invaluable to free up workdays so that new customers and business opportunities can be secured.

6.Control Is Never Forfeited

The problem with traditional funding means to solve cash flow problems and debt payment is that it often involves concessions of control. Taking on an investment partner, for example, is a surge of cash, but it often comes with someone else having input or contingencies on how the business operates. Factored invoice solutions avoid this issue. The business keeps complete, ultimate control over their invoices and decides how many, when, and to whom to factor. Selling receivables offers flexibility without concessions that collar freedom.

In closing, the above are just six of the factor highlights on why and how a business using the service is outpacing its competitors on all fronts. It’s because they have immediate, debt-free, credit-building cash from their sales that’s freeing up all their resources without sacrificing control, and all the only thing lost along the way is a tiny fraction of the full profit on the factored invoices that they would have likely waited weeks or months to otherwise finally receive.