Never heard of factoring? You’re not alone. Only around 30% of business owners know about factoring. Only 70% of those who know about factoring have the wrong or a negative impression about what it actually is. So what is factoring?
Factoring, or invoice factoring, is the process of selling your pending invoices to get up to a 96% cash advance in just 24 hours or less.
So many business owners do not know about the many benefits of factoring because of research that is clouded by myths. Do you have the wrong definition of factoring services? Keep reading to find the out the 4 common factoring myths.
Myth 1 – Factoring is Only For Small Businesses
This myth is one of the most common misconceptions about factoring services. Although small businesses can greatly benefit from using factoring, it also caters to businesses of all sizes. By factoring your business’s outstanding payments or contracts, you will be able to have instant cash in your pocket.
For both small and major businesses, factoring services can help your business secure a strong source or boost your current capital.
Myth 2 – All Factoring Companies are the Same
Each and every factoring company is different. Some factoring companies only serve a specific industry, while others serve a wide variety. Factoring is an industry specific service that is targeted to give you the financial services you need – fast.
Our factoring company offers factoring services in a number of industries across the us. Unlike us, most factoring companies only operate out of one major corporate office. We have offices located all over the US to ensure that our factoring services are specific to the local laws and requirements in your area.
Myth 3 – It’s Expensive
This is the most common myth about factoring services. Many businesses believe that the rate for factoring services is more than the rate of a loan. In some cases, this can be true depending on the company. Some factoring companies charge many fees and additional expenses that can make their services more than a loan.
Our factoring services are different than others. We never look into the financial history of your business. We look into the financial strength of your clients. Because we purchase the invoice, we are now responsible for collecting payments from your customer. This takes away any potential risk to your name, making it factoring much less expensive than a loan.
Myth 4 – You Have To Factor All Of Your Invoices
This myth is half true. You can factor all of your invoices, but you don’t have to. We never ask you to give all of your invoices at a time. We also offer spot factoring services that allow you to factor just one, or a few invoices at a time.
Why would you only factor one invoice at a time? If your business takes on a major order or client, it can completely crush your finances. Rather than factoring multiple invoices to make up for this expense, you could use spot factoring to factor the single invoice from that client to get the right amount of financing to manage the project.
We hope that by reading these 4 common myths of factoring you have come to realize the true benefits of it. Using factoring services can help your business secure a strong source of capital for growth.