Explore Your Business Growth: 6 Ways Invoice Factoring Can Help You
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With additional capital, you will have the chance to fund initiatives that will help you grow your business faster.
Companies often need assistance managing their cash flow, especially in the growing stages. Most businesses do not begin with more significant amounts of cash available, and maintaining what is available can be substantial. Specific financing methods can aid in keeping cash flow steady. One usually used type of financing is invoice factoring. This article will explore the advantages of invoice factoring to small businesses.
How Does Invoice Factoring Work?
Invoice factoring (a.k.a. accounts receivable factoring) is a form of small business financing. This is where a business vends its invoices to a factoring company in exchange for upfront funding. When the customer pays, the remaining invoice balance is paid less fee to the business owner.
Similarly, invoice factoring allows you to receive the working capital you need to maintain operations. And since it does not take on the periodic fixed payments associated with a term loan, you can plan for the future. If slow-paying or non-paying clients are stalling your ability to meet payroll or pay bills, invest in equipment and technology, or hire more personnel. Invoice factoring can help you support cash flow by liquidating your outstanding accounts receivable to meet your business needs.
6 Ways that Using Invoice Factoring Can Benefit Your Business
The benefits of invoice factoring can be very significant. Small and mid-sized businesses can unlock access to anticipated receivables and pad their cash flow using invoice factoring. A few advantages of invoice factoring include:
Get Access to Funds Quickly. Once you have decided to factor in your invoices, you will be able to receive financing quite quickly. Often, money is available within a week following the signing of a factoring agreement. Invoice factoring can get you access to the cash you need and help resolve the issue, especially if your company is in a severe cash crunch.
Not Reliant on Credit Score. New companies that have not yet built their credit history can benefit from factoring help. You can have the financing you need without providing a credit score. This is because lending is based on your customers' credibility instead of yours. Hence, factoring companies do not need to consider your creditworthiness.
Easy to Obtain. You can enter into a factoring agreement quickly if you meet the qualifications. Sometimes, you can start factoring within a business day or two. This sharply contrasts with other financing types, like bank loans. Often, bank loans require several weeks (and lots of red tape) before you can obtain the funding you need for your company.
No Business Debt. Factoring is not a loan. Thus, you are not taking on debt you will need to repay over time. The clients you have are responsible for paying their invoices, not you. You are simply benefiting from a faster payout on their invoices. Your balance sheet will display limited liabilities (unless you have taken on a prior loan), which can help new companies. There is also no personal guarantee required.
Relatively Affordable. Although small business invoice factoring services charge a fee, their costs may be less compared to a new company with no credit history. A business with a limited lending history or someone with bad credit may have to accept notable interest charges before being accepted for funding. Choosing invoice factoring can decrease finance expenses rather than debt financing.
Build Your Company's Credit. While invoice factoring does not enhance your company's credit directly, it does serve to help you with your working capital. You can be assured that your vendors are paid on time with the needed funding. In addition, most invoice funding companies do not place limitations on companies seeking to get debt financing. This gives you the option to get additional funding in the future if you need it.
Wiseteam Consulting: Business Funding Solution
Wiseteam Consulting offers Small and Medium-size Business Invoice Factoring. Unlike traditional banks and alternative lenders, Wiseteam Consulting genuinely values your business. Your success is most important to them, so they will never over-leverage your business by offering you more funding than you can handle. The company's simple application and quick approval process make it easy for you to get the working capital your business needs. Their experienced funding consultants will walk with you every step.
And so, turn your financial ambitions into actions and convert your unpaid customer invoices to immediate cash advances. Call Wiseteam Consulting or visit their webpage.***