For some small business owners, maintaining a steady cash flow to keep daily operations running smoothly and having enough capital to promote growth is a constant struggle. This is especially true for businesses that have their accounts receivable on a 30, 60, or 90-day payment agreement. That outstanding revenue can sometimes be the difference between moving your business forward and standing still. Factoring capital is a way to eliminate the wait and get that revenue when you need it most.
The process of factoring capital is referred to as invoice factoring, account receivable factoring, or factoring. It is an alternative financing option that allows business owners to turn their accounts receivable into cash without waiting to receive payment from their customers. Selling the invoices of customers in good standing to a factoring company can provide businesses with cash when they need it most. Factoring capital offers other benefits as well.
Inconsistent cash flow and taking on too much debt are among the top reasons businesses fail. Invoice factoring allows you to avoid both. As opposed to traditional financing, factoring capital allows you to get cash quickly without taking on any additional debt. You are simply getting an advance on money that’s already owed to you. That boost to your cash flow can help you avoid the possibility of failure and keep your business moving forward.
Whether it’s opening an additional location, expanding your product or service offering, or venturing into the online marketplace, business growth is the goal of every small business owner. It takes time, hard work, and of course, cash. Factoring capital gives you the ability to buy raw materials, take on larger orders, and grow your business. Never turn away a big order or miss out on a golden opportunity again.
Once you’ve sold invoices to the factoring company, you’re no longer responsible for collecting them. The invoices are then owed to the factoring company. The time and payroll dollars saved by not having to follow up on invoices, collecting outstanding amounts, and the bookkeeping involved can be invested in growing your business instead. The factoring company will handle collections and provide you with detailed reports of every transaction.
It’s not uncommon for small business owners to have a few black marks on their credit reports. While this could easily cause you to be denied for traditional financing, it’s not an issue when factoring capital. The factoring company is concerned with your customer’s creditworthiness, as those invoices will be owed to them. The factoring company will check the credit of the customers whose invoices you submit for factoring. However, it is still wise to only submit invoices for clients in good standing with a solid payment history.
A traditional business loan often comes with a loan covenant attached which dictates how the money can be used. This isn’t the case when factoring capital. With invoice factoring, the cash is yours to invest in whatever area of the business you chose.
Whether it’s an unexpected business opportunity or everyday investment in business growth, it’s important to have the capital available to address it in a timely manner. While waiting for invoices to be paid, a business owner can miss out on a chance to move their business forward and push ahead of the competition. Invoice factoring can help you get the capital you need when you need it.
CapFlow Funding Group specializes in invoice factoring and works with a variety of businesses, large and small to fuel business growth. Our invoice factoring programs can benefit businesses in need of short-term working capital. We also partner with other lenders to provide funds for businesses that require financial services other than ours. Contact us today and find out how we can help you grow your business.