There are few things in the business world that are more important than steady cash flow because so many aspects of your business depend on it. For instance, purchasing inventory, paying employees, covering expenses, and paying your suppliers all have to be done on time and with regularity, in order for your business to function smoothly.
But sometimes you’re involved in a business which does not receive incoming revenue in that same regular fashion. The retail business, for example, is notoriously irregular in receiving invoice payments from customers, and there are times when payments can get to be as many as 30, 60, or 90 days late. That can wreak havoc on your cash flow, and sometimes you need to quickly cover gaps in that cash flow. One of the best ways to accomplish this is by invoice factoring.
What is invoice factoring?
Invoice factoring is a financial arrangement wherein a business owner like yourself sells some or all of your invoices to a factoring company at some percentage of their face value. You receive immediate cash in the transaction, and the factoring company becomes the new owner of those invoices, and would then become responsible for collecting on them.
Why is invoice factoring beneficial to companies?
There are a number of reasons why you might choose invoice factoring over trying to be approved for a traditional loan from a bank. Probably the most obvious reason for this would be the speed at which invoice factoring can be arranged. If you were to apply for a bank loan, it might take as long as two months to be approved, whereas invoice factoring can be set up in less than a week most of the time.
It’s also true that your company doesn’t need to have an excellent credit history with invoice factoring in order to be approved because the truth is that an alternative lender will look more closely at your customers’ prompt payment history as a criterion for approval. Another advantage of invoice factoring is that it is not a loan, and that means you never have to pay money back, in the way that you would make monthly payments to a bank for a loan.
Factoring through Business Capital Providers
If your company needs to raise cash quickly to cover a cash flow gap, you should consider factoring through Business Capital Providers. Contact us to inquire about invoice factoring, and get the working capital you need to keep your business running smoothly.