Why Factoring is a Great Option for Your Business?

Offering longer payment terms can help draw more customers to your business. But it’s not always easy to hold out that long. With clearing times for invoices taking 30, 60, or 90 days, not all small to mid-sized companies or startups can afford that option. That’s where invoice factoring comes in. If you’re wondering where to get cash to keep your business afloat, invoice funding can provide the solution you need.

What is Invoice Factoring?

If you have invoices that will clear in about 90 days, you can avail of invoice factoring solutions. You sell unpaid invoices to a factoring company. That generates cash you can use immediately. You won’t have to wait for the invoices to clear to receive payment from your customers. That gives you a tremendous cash flow advantage.

Is It Right for My Business?

You’ll need to consider several factors to determine if invoice funding is the best solution for your money problems.

  • You pay for the fees. Some companies charge hidden costs. One way to counter this potential problem is to find a trustworthy company for invoice factoring in Canada. That will help you side-step the high costs that come with factoring solutions. With enough research, you’re sure to find affordable options.
  • You work directly with consumers. Invoice factoring isn’t ideal for all businesses. They only work for B2B companies since the transactions involve invoices. If you work directly with or sell products to consumers, this option won’t suit your business.
  • You lose control. Since factoring companies collect on the invoices, they deal directly with your customers. Make sure you choose a company known for its fair and ethical practices. The last thing you want is a factoring company that uses abusive, invasive means to collect on those invoices. That will ruin your company’s reputation with your customers, and you may even lose any future business with them.
  • You need to have the right customers. Customers with bad credit or those who fail to pay on time will compromise your working relationship with the factoring company. If there are missed payments, the company will not approve the financing. Choose customers that won’t miss payment deadlines.

Why is Invoice Factoring Right for My Business?

  • Fast cash. If you need funds and you need them immediately, invoice funding can provide the financial solution you need. You can cover any gaps in your cash flow with invoice funding.
  • Better cash flow. Improve your cash flow with invoice funding. Provide longer payment terms to customers while keeping your business afloat. With invoice funding, you won’t have to worry about where the cash to support your operations will come from.
  • Easier approval. Approval for bank loans takes a long time. They don’t happen in a matter of days. Plus, you need to submit requirements and documents. But if you are only starting in the business, running a startup, or a small to mid-sized business, you may not have enough requirements to satisfy banks. Invoice factoring companies don’t require as many documents so that you can count on a faster approval process.

No collateral. Unlike bank loans, you won’t have to use collateral with invoice funding.

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