Choosing Invoice Factoring for Your Small Business

Are you a small business owner? Are you hesitant to go to a traditional banking institution for a high rate business loan?

Invoice factoring is one of your best options. Also known as accounts receivable factoring or funding, it’s commonly utilized by seasonal businesses wherein they sell their outstanding invoices to a reliable invoice factoring company. In return, the company can immediately advance up to 75% of the invoice amount to the small business. In essence, helping the small business leverage their invoices for working capital.

The invoice factors, can relinquish you from your invoice collection efforts and assume that responsibility. Allowing you – the business owner – to focus on what you should most, selling, management and marketing. Once the invoice amount is paid, the invoice factoring company will take their fee and return any excess profits to the small business owner.

If you’re a small business owner with slower than usual business seasons. Leveraging your invoices can be your solution towards peace of mind during the rough times. Below, we have provided some reasons why you should choose invoice factoring during those sluggish seasons. After all, not getting your invoices paid can be debilitating, as explained in “The Debilitating Effects A Business Experiences When Invoices Get Paid Late”.

Prevent the Accumulation of Debt & Improve Your Sales!

The slow months can take your business from a positive balance sheet, to one that’s sitting on the red. By selling your invoice in exchange for a percentage of its total value, you can:

  • Increase your working capital during the times you need it most.
  • You will simultaneously minimizing your exposure to debt due to unpaid invoices.

Build Your Business Credit

Invoice factoring is your alternative to creating debt. With invoice factoring:

  • The potential to eliminate debt is greatly increased.
  • It also provides your business with working capital it has already gained, effectively helping your business to avoid debt at all cost.

The last thing a business owner wants to do is go into bankruptcy, after factoring your invoice, you can go back and settle old debts. Here are other notable points you should be aware of to build your business credit.

Take your Business to the Next Level

If business expansion is in your future plans, making those plans come true a lot sooner may sound like a promising deal. With invoice factoring you can. The ability to prevent debt and build your credit will allow you to do two important task.

  • Create a nice next egg you can tap into when you choose to begin expanding.
  • Increase your working capital for emergencies once you’re in the process of expansion.

Hassle-Free Transactions

Don’t you just hate it when you have to wait in line at the bank in order to apply for a loan? Chances are you won’t be qualified unless you have the necessary credit or collateral. With invoice factoring:

  • You can immediately avail of its numerous benefits as long as your customers are proven creditworthy and their invoices are eligible for factoring.
  • You beat the time-consuming bank procedures and stress you have to deal with when applying for a loan.
  • With some direct lenders you can even apply online.

Run Your Business Freely

Too many hands in the pot can prohibit you from making quick decisions that will make your company grow. The beauty about an invoice factor is that:

  • They cannot get involved in the overall operation of your business, unlike a VC or some investor related banking programs.
  • Once you have the cash, you can spend it any way you want for business puposes, and rest assured, the factoring company won’t meddle or tell you how to run your company.
  • You can choose to buy more products to sell or even equipment to expand your business. It’s up to you.

You’re Always in Control

One of the perks of choosing invoice factoring is that you get to choose which invoice you want to factor and how many of them you want to factor. You can factor a single invoice or as many as you want to provided. This is the kind of freedom and flexibility only invoice factoring companies can bring to you! When you need questions answered, this article will help you explore your funding options.

No Lost Opportunities

As a small business owner, you can never tell when you’ll need extra cash. Imagine that your strapped for cash but you need working capital for a new order that comes in. The large order is far more than what your business finances can support at this time. However, you do have outstanding invoices with substantial amounts. You don’t want to lose the deal, so you decide to leverage the invoces at 75%. With the extra working capital, you now close the deal on the new order and fullfil your obligations. The added profits helps you reach your goals for the year.

Take your Business to the Next Level

If business expansion is in your future plans, making those plans come true a lot sooner may sound like a promising deal. With invoice factoring you can. The ability to prevent debt and build your credit will allow you to do two important task.

  • Create a nice next egg you can tap into when you choose to begin expanding.
  • Increase your working capital for emergencies once you’re in the process of expansion.