6 Advantages of Invoice Factoring
If your business relies on your customers paying their invoices on time, you know the struggle of waiting for the money to come in. The longer it takes for them to pay, the harder it becomes for you to grow. Factoring receivables provides you with a way to get paid faster, which then helps you to meet the needs of your business and achieve your goals.
Get More Money Upfront
Some traditional lenders accept receivables as a form of collateral, but you only get a small portion of their value. Factoring companies, on the other hand, provide more for your invoices, which means more money for your business. Many factors provide up to 80% (sometimes more) of the total value.
No Collateral Needed
It’s not uncommon for conventional business loans to require collateral to secure financing. A significant benefit of invoice factoring is that you don’t need to supply any additional assurances. The only thing you need to do is sign over the unpaid invoices.
As a business owner, you know the importance of time. Business loans can take weeks, if not months, to fund, which could mean losing out on an opportunity to take your business to the next level. Invoice factoring provides you with money quickly, so you never have to worry about missing a chance due to short funds.
Grow Your Business
Having to wait for customers to pay before you can start doing anything else can put your business at a standstill. Invoice factoring provides you with the funds you need right away, so you don’t have to put new projects on the backburner.
Let Someone Else Handle Collections
Encouraging slow-paying customers to pay their invoices is more than just a pain. It’s also incredibly time-consuming. When you sign over your unpaid invoices, the factor takes over collecting the payments. As such, they manage the collections process. That’s one less thing you need to handle, which means you can put your focus elsewhere.
Avoid Additional Debt
While some debt can be helpful, too much can quickly sink your business. Invoice factoring isn’t technically a loan. The factor provides you with money you’re already owed. Your customers then pay the factor. You don’t have to repay anything, so there’s no additional debt.
With factoring, you get paid faster. As a result, you increase your cash flow, which then helps you to grow your business the way you want.