Why Would You Need Invoice Factoring For Your Business?

Do you need to improve your business’s cash flow and working capital? Are you looking to capitalize on opportunities, but just don’t have the available funds to take advantage of them? What about your operating expenses – are you looking to cut down on them? Do you have many invoices outstanding, and are waiting for them to be paid?

If any of the above scenarios apply to you, then invoice factoring just might be the ideal solution.

What is Invoice Factoring?

Also referred to as accounts receivable financing or debt factoring, invoice factoring involves making funds available by selling invoices due in the near future to a ‘factor’ who pays business owners approximately 80% of the value of the invoice upfront and holds the remaining 20% (minus any associated fees) at the time that the invoice is paid.

The factored invoice represents your clients’ promise to pay you for any goods or services that have already been delivered or fulfilled. Factors lend money on such invoices because they have determined it’s highly likely that the invoices will be paid by your customers, instead of skipping out on the bill.

Invoice factoring is ideal for short-term issues with cash flow. Providing your clients with the option to pay up at a later date can help increase sales and customer loyalty, and even help you get a leg up on your competition. Invoice factoring is better suited as a solution by advancing money today on invoices that are due within the next 30 to 90 days.

Here are just some of the benefits that you can enjoy by taking advantage of invoice factoring:

  • Increasing cash flow – Rather than waiting for your clients to pay their invoices, invoice factoring gives you cash right away that can be used to keep your cash flow high.
  • Take advantage of business opportunities – Since your business’s cash flow is directly tied to your sales, you can benefit from any growth opportunities that may come your way without worrying about not having enough available money to tap into. Whether it’s new advertising initiatives, equipment needed for expansion, or adding inventory, you can take advantage of these opportunities with invoice factoring.
  • Alternative to taking out a traditional small business loan – Some people might have a tough time getting approved for a small business loan. These loans can also be restrictive in the forms of financing available. Factoring provides business owners with the working capital needed without all the hoops to jump through.

Take advantage of invoice factoring today!