If you want to bridge invoice payment gaps, then commercial factoring companies can help. Aside from bridging payment periods, theyand#39;ll also help you avoid the burden of invoice collection. You can either use the invoice funding for your businessand#39; daily operational costs or reinvest the funds.
An estimated 28 million small businesses are operating in the United States. When these small businesses want help in bridging invoice payment gaps with upfront payments of up to 90% of the original invoice, factoring companies can provide assistance.
Do you need factoring financing to get your business out of a cash flow problem? Or, do you simply want to have a steady stream of cash? Check out the benefits youand#39;ll enjoy when you work with a company that offers the best invoice factoring services.
What Are Commercial Factoring Companies?
If you lack adequate financing for your business, factoring companies can help you with their full suite of solutions. One of these solutions is invoice factoring—a type of accounts receivable financing that allows your small business to receive immediate cash by converting outstanding invoices due within 90 days.
Delays in payment collection sometimes take 30 days up to three months.
Invoice funding can take the load off your back when they purchase your accounts receivables and provide you with immediate cash of up to 90% of the invoice value. Instead of paying you directly, your customer whose invoice the factoring company bought will now furnish the amount they owe to the factoring company. Once the invoice gets paid by your customer, you get the rest of the balance after the factoring company deducts their service fees.
Instead of having to wait for months to get paid, you can immediately access and use your accounts receivables.
How It Works
For businesses to thrive and grow, they need funding thatand#39;s readily accessible. These funds are necessary to cover daily operational costs, purchase essential equipment and machinery, buy additional inventory, or pay employee salaries. Without available funding, your business activity can come to a halt.
Invoice funding can provide you with a rapid collection process for your invoices without directly pressuring and following up on your customers.
Are you still wondering how commercial factoring companies can help your business? Hereand#39;s a step-by-step guide, so youand#39;ll know what to expect:
- Furnish a copy of the invoice and give it to the factoring company youand#39;re working with.
- The invoice factoring will pay you roughly between 70% to 90% of the invoice value in cash.
- The factoring company will service the invoice as a collections department would.
- Your customer will pay the total amount of the invoice to the factoring service.
- You get paid the remaining balance after the factoring deducts their professional fees.
However, you should take note that invoice factoring differs from a conventional line of credit offered by banks. Instead of focusing on your companyand#39;s credit rating and trustworthiness, the process scrutinizes your customersand#39; credit scores. Another great thing with factoring is that you wonand#39;t have to go through the lengthy application and approval processes that usually come with bank loans.
How Can Commercial Factoring Companies Benefit Your Business
With commercial factoring, you donand#39;t have to worry about reduced credit availability common with bank loans. Aside from that, youand#39;ll also enjoy a host of other benefits, including the following:
1. Receive Quick Payments of Invoices
One of the major reasons commercial factoring is fast becoming a trend is due to the speedy processing. Most invoices get paid somewhere between 30 days to 3 months. With invoice factoring, you can get your funds in as little as 24 hours.
2. Avoid Constant Checking of Your Credit Score
Commercial factoring is different from bank loans, so your credit score will not undergo constant checking. It is the customerand#39;s credit that will be checked, not yours.
3. Lessen the Paperwork Requirements
Invoice factoring calls for lesser paperwork since itand#39;s a relatively simple process compared to loans and other financing options.
4. Reduce the Need for Investors
Why would you have to entice outsiders to invest in your business when you can get immediate cash flow through invoice factoring?
Grow Your Business With Factoring
You donand#39;t have to be stuck with no cash flow while waiting for your slow-paying customers to settle their invoices. With load factoring companies, you can get immediate funding that can help grow your business with ease.