If you are like most manufacturing businesses, you have probably struggled from cash flow problems. The unpredictable income has stunted your business’s growth for years. Rather than caving to the inevitability of cash flow problems, start growing your business using manufacturing factoring.
What is Manufacturing Factoring?
Manufacturing factoring is the process of selling your company’s outstanding invoices for a cash advance of up to 96% of its total. A factoring company will step in and purchase your invoices to give you this advance in just 24 hours or less. However, this is not like a loan. Manufacturing factoring only translates your existing receivables into cash, not a predetermined sum of money.
How Does Manufacturing Factoring Work?
You will send your unpaid invoices to a factoring company.
Rather than approving you based on your business’s credit, they approve you based on the financial strength of your clients.
The factoring company will verify your invoices and deposit the determined percentage of cash into your account in just 24 hours or less.
Control and maintain your business as usual, while the factoring company takes control of the collections process.
You will then receive the remaining invoice amount, minus a small factoring fee, after the invoice has been paid in full.
What are the Benefits of Manufacturing Factoring?
There are many benefits that your business can expect from using factoring. Some of the many benefits that your business can immediately utilize are:
Unlike getting financing through a bank, you will never be held in a long-term contract. Most factoring contracts last anywhere from six months to a year, allowing your business to get short-term financial help.
Getting financing through a bank comes with high interest rates, especially if your manufacturing business is low on cash. A factoring company understands the manufacturing industry and the challenges that come with invoice-based work. Factoring companies offer the lowest rates to ensure that your business is getting the financing it needs, at the right price.
No Monthly Minimums or Maximums
When you use factoring, you will never have to worry about paying monthly minimums or maximums. Your funding is based solely on your business’s sales. This means that you can factor as much or as little as you want, as often as you want, to maintain the cash flow that works best for you.
Funding That Prompts Good Credit
When you use factoring, especially non-recourse factoring, your business has the opportunity to build a strong and secure source of capital. This will help your business build good credit, even in its earliest days. With factoring, the immediate working capital can help your business pay down old debt and revive your credit rating for future financing.
When Can Your Business Start Factoring?
Because factoring companies make their decisions based upon your client’s credit worthiness, you can start utilizing the many benefits of manufacturing factoring almost immediately. When you seek financing through a bank, you can wait up to 30, 60, or even 90 days just to get approved. We approve and deposit cash in your account in just 24 hours or less.
Manufacturing factoring has helped countless businesses get the cash they need to improve cash flow and grow larger than ever before. We hope that this comprehensive guide to factoring has helped you see the many benefits that factoring can have for your business.