A consulting company sees many expenses. From office space rent to employees, your consulting business has many expenses that can make a major impact on cash flow.
When cash flow gets low, one of the biggest problems that a consulting business has is meeting payroll. Because of the invoice nature of consulting businesses, having cash on hand for any expense, including payroll, is practically unheard of.
How an Invoice Factoring Company Can Help Your Consulting Business
As an owner of a consulting business, you are constantly waiting anywhere from 30-60 days for your clients to make payments on their invoices. This can completely ruin your business’s cash flow. Thankfully, there’s a way for your business to get paid for its outstanding invoices faster—invoice factoring. Here are 3 ways that your consulting business can use invoice factoring to improve cash flow.
1. Invoice Factoring Can Help Your Consulting Business Get Paid Faster
When using invoice factoring, a factoring company will step in and purchase your business’s outstanding invoices to give you an advance of up to 96% in just 24 hours or less with low rates. With this, you practically immediate access to the funds owed to your business. This allows you to skip the traditional 30 day waiting period after you issue and send out your invoices. By letting an invoice factoring company factor your invoices, you’ll be able to get faster payment for your work that will let you:
- Stock up on inventory
- Hire more staff
- Take on more clients, and more
2. Invoice Factoring Can Help Your Consulting Business Build a Cash Reserve
When you use invoice factoring for your consulting business, your business will get paid instantly for it’s work. When you do this, your business can start to build a strong cash reserve — quickly. In the consulting business, excess cash is hard to come by. By letting an invoice factoring company purchase your outstanding invoices, you’ll be able to build a strong reserve of capital to better manage your day to day expenses, and most importantly, pay off any debts towards your business.
By building a strong reserve of cash and paying off current debts, your business will be able to set itself up for future financial success. With good credit, your business can get affordable financing to expand office space, take on bigger clients, hire more employees, and more.
3. Invoice Factoring Can Help Your Consulting Business Make Payroll
As mentioned before, one of the most common struggles of consulting businesses is payroll. When cash flow is low, due to outstanding invoices, the first thing that suffers is your payroll. By partnering with an invoice factoring company, your business will be able to build a strong reserve of cash that will make it easy for you to make payroll month after month with no issues.
By partnering with a great invoice factoring company, your business will be able to better manage its payroll. Because the factoring company takes on the task of collections, your administrative team’s time will be free’d up, ensuring better management of payroll and other office budgeting tasks.