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Why Factoring is a Great Option for Your Business?

by Peter Amundson

Are you looking to start some new projects without the worry of chasing up overdue  invoices? If so, business factoring is a great option for you.

Other good reasons for implementing invoice factoring include being able to pay your employees and suppliers on time, as well as building up stock and covering any unforeseen tax expenses.

Why Choose Factoring?

If your business is needing to improve its cash flow, then factoring is the smart choice that allows you to focus on growing your business rather than chasing up your debtors.

Clients that take some time to settle their outstanding invoices can cause a major inconvenience for your business. The professional management of all your invoices by way of factoring means that not only do you get cash for your invoices when you need it, but the invoicing side of your business is a lot cleaner and clearer, allowing you to focus on what’s ahead.

Factoring is a great option for your business if you don’t have the time or resources to conduct a proper background check on your customers. A factoring company will perform a credit assessment on your customers before underwriting the debt, so you have a partner with your vested interest in your corner.

If your business is relatively new and you don’t have an extensive credit history, then business factoring can pave the way for new opportunities. The days of applying for bank loans and explaining the ins and outs of your business to a loan consultant are over, thankfully.

With factoring, your invoices are bought by a factoring company and you get paid – freeing you up to focus on running your business and growing it, rather than chasing up money for outstanding deals.

With factoring, you have control over how many invoices you choose to factor. Perhaps you’re looking at quick cash over a short period of time by factoring only a few, big invoices – or perhaps you’re looking for more administrative oversight with all your invoices being handled by a factoring company.

The money you make from selling your receivables is yours to do with as you see fit, empowering you as a business owner. You don’t need to pay back investors or the bank – you can invest in new inventory, pay your salaries, pay your monthly overheads and even take a calculated risk on a new business venture.

Debt can be overwhelming for any person in business. Factoring is a great option for your business if you’re looking to avoid this looming threat of owing people and institutions money.

Quite simply, business factoring doesn’t involve debt because it’s not a loan – it’s a financial transaction. Your open invoices are bought (often factoring companies will pay upwards of 90% for the value of your invoice) – and you get the cash within a few days. On top of that, the collection responsibilities (think: having to make nagging phone calls to clients) are taken out of your hands.

Time is money, of course, and by freeing up time previously spent dealing with outstanding invoices you can chase up new leads, consolidate your business and focus on the positive, money-generating side of things. Factoring companies can assist with account management programs and other interventions that will see cash flow in your business become less of a problem in the future.

Factoring is also suitable for your business if you are looking to scale up or turn things around quickly. If your business is growing fast and you are regularly invoicing clients, you will need to maintain momentum to stay ahead of the competition.

Implementing financial systems, involving checks and balances to ensure timely payment from customers can be time-consuming when your key focus is keeping up with demand.

Business factoring gives you peace of mind in knowing that you’re getting your money regardless of the circumstances. This means you get to finance new projects while the factoring company waits for your clients to pay them for the previous ones.

Factoring can be a long or short-term solution for you and your business. If you find yourself in a financial bind, then a factoring company offers a speedier resolution than a financial institution will.

Alternatively, factoring companies are also valuable long-term allies as they can help you grow consistently over time and ensure that your accounts receivable are in good order and that the people that owe you money are held accountable for their debt.

Factoring is a great option for your business if any of the above boxes have been ticked with the scenarios that we have described. The terms are flexible and leave you in charge of what you want to do with the money that is soon at your disposal.

For these reasons, it’s simply not worth waiting for the 90 days to get paid the full amount on an outstanding invoice from a supplier when you have business needs that need to be met now. Factoring is the modern-day solution for all businesses that are thinking outside of the box when it comes to finding new ways of improving cash flow without compromising the growth of their business.

Business Factors & Finance

Factoring can help you and your business grow more rapidly, while also consolidating areas of financial management that need attention. We can help pay the bills and help fund your growth. We can expertly assist you with the professional management of all your invoices.

We will also underwrite your new and existing customers so you don’t take on any unnecessary risk. This will help you increase sales as you can be in a position to confidently extend credit terms to new customers without hurting your cash flow.

If you want help improving your cash position with a broad spectrum of options, feel free to contact Business Factors & Finance at (800) 672-3844 or find out more about our services on our website.

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