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Is Invoice Factoring Only for Struggling Companies?

If you have been considering account receivables factoring as a way to secure funding for your fledging business but have been reluctant to do so because you are concerned factoring receivables is only for struggling businesses, then we need to talk to you.

There is a perception out there on the internet that businesses turn to factoring accounts receivables basically when they have exhausted all other resources and there is no other place to turn to get money. In other words, factoring accounts receivables has gotten a bad rap as being a last resort financing method used by businesses that are about to shut their doors.
Factoring for Invoice Business

Factoring Accounts Receivable Can Be for Any Business

The fact of the matter remains that thousands and thousands of companies small and large rely on invoice factoring services for a number of reasons and a small percentage of them are companies that are in dire straits. Because invoice factoring is an alternative source of lending, does not require a credit check and is not a traditional bank, some people think it must just be for those businesses that are on the brink of going under.

Receivable Factoring Is on the Rise, But Not For Reasons You Might Think

In actuality, a number of invoice factoring clients are companies that are experiencing rapid business growth. These companies use the expediency of invoice factoring to ensure timely order fulfillment, manufacturing or payroll. Some industries such as construction, trucking and freight use factoring receivables as par for the course because the nature of the business with its slow paying customers demands it.

And last but not least, with the state of the economy, and fewer and fewer banks are offering more standard small business term loans, more companies have turned to account receivables factoring than ever before. Some of these businesses are startups or have less than five years’ experience. Others just don’t want to sit around and wait for weeks and weeks for the bank to decide to give them a loan.

So there are a number of reasons companies choose invoice factoring; those that choose invoice factoring as a means to prevent their business from filing bankruptcy make up the very small minority.

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About the Author:

Robert Bernfeld started in the commercial finance industry in 1974. His early years included positions with Aetna Business Credit and Foothill Group. During the next thirty five years. Mr. Bernfeld established both equipment leasing and accounts receivable factoring companies. He partnered in founding Business Facilitators, Inc. in 1999. Mr Bernfeld graduated from the University of California, Riverside in 1974 and received his Juris Doctorate from Loyola University School of Law in 1977.

View More Posts By Robert Bernfeld