The Benefits of Factoring for Business Growth
It is hard to deny the importance of striking when the iron is hot with regard to business growth. Sitting too long on an exciting opportunity to expand your company may force you to miss out on a good deal. Unfortunately, cash flow troubles can make it difficult to commit to certain prospects. When you are unable to access working capital due to unpaid invoices for services you’ve completed, you may want to examine what a service like factoring can offer. There are a few ways to use this financing solution to fund your business growth.
Understanding the Service
This financing option is a very simple and straightforward solution. A company that provides this service will assess your invoices and purchase qualifying assets. You will receive a percentage of the value right away and the difference once the full amount has been collected from the customer. There is a fee involved for the service, but an advance on funds you have been waiting to see can be a huge advantage when it comes to providing yourself with access to the working capital you need.
The Key Benefits
Factoring can offer your business a number of benefits. First, this service is not considered a loan. Instead, it is viewed as an advance on funds you are owed with the invoices being used as collateral. This is advantageous because it means you are not taking on any debt by using the service. Other options like loans can force a business owner to land in a more complicated financial predicament by owing more money to new parties. When you factor your invoices, you simply pay for the service and receive what you are owed.
Important Points of Note
While this can be a very useful financing solution to use, there are a number of important points to keep in mind. Above all, you need to know that only specific invoices will qualify. The company providing the service needs to be sure your client will pay back the debt. In most cases, the invoices that are approved are from clients who are reputable or well-established. Invoices from international corporations and government agencies are some of the most common invoices purchased during accounts receiveable financing transactions.
To grow your business, you need access to working capital. Improve your cash flow and solve the problem of unpaid invoices by exploring a solution like factoring. If you have qualifying invoices in your possession, this can be a simple way to free up the funds you require.