How invoice factoring is beneficial for businesses
In order for a business to thrive it must have all available funding at its disposal for whenever an urgent need arises. Whether it be for regularly planned spending or unexpected expenditures. This is why alternative financing options are important: these lenders are the ones that businesses often turn to when they need quick funding to keep their business moving forward.
Invoice factoring is arguably one of the quickest and best funding options for businesses across various industries. Below we discuss how invoice factoring helps different industries get the funds they need to keep their cash flow healthy.
Industries that commonly use invoice factoring
All industries can benefit from invoice factoring: the quick turn-around time, the debt-free funding, and the streamlined approval process make it one of the easiest funding options to turn to. Here are some of the most common industries that utilize invoice factoring.
The transportation industry is very dynamic. Because of the constant change within this industry, there are generally many unexpected expenses that the business requires funding for, i.e., oil and gas expenses, the toll payments, and of course, the emergency repairs. With invoice factoring, the business can quickly and easily utilize the factoring facility to meet all the current and urgent needs of the business.
During the COVID-19 pandemic, utilization of health insurance skyrocketed. The reality is that health insurance companies do not pay on time. Yet hospitals and other healthcare facilities need timely payments to continue to offer the best healthcare services and to keep the institution running in a stable manner; healthcare facilities cannot wait for insurance companies to pay them before continuing the services. Factoring companies can partner with healthcare institutions to provide funding for immediate needs, or for greater opportunities that would enhance the healthcare facilities’ services, and/or equipment.
Oil and Gas
The oil and gas industry is a massive enterprise. It is an enterprise that requires substantial funding, both for planned expansion and unexpected expenses. These businesses usually plan for expansion in the future, and invoice factoring for oil and gas companies could surely give a boost to companies in this industry. Normal business operations for these types of companies require funding for unexpected equipment issues in addition to plant maintenance which requires a significant amount of funding. Invoice factoring can provide the business with that funding in 24 hours.
The staffing industry is the backbone of all industries as they supply the manpower that other industries require. Staffing companies generally have an urgent need for cash. They specifically need to sustain their payroll on an ongoing basis to ensure that the business stays afloat. Invoice factoring for staffing companies assists all businesses in this industry.
If you think about manufacturing companies, the first thing that comes to mind is the volume of products or items being produced on a daily basis. Companies that produce a significant amount of products generally experience a shortage in their day-to-day funding, especially when there are unpaid invoices from their distributors. However, production should not be put to a halt because of that, especially when orders continue to come in. Invoice factoring can assist by providing the necessary funds through the sale of their invoicing.
The telecommunication industry is one of the most costly industries in terms of daily overhead expenses. There is equipment maintenance and repair, payroll, and security, to name a few. If one or more of these needs cannot be met by the companies existing cash flow, it could cause complete chaos for the business. Invoice factoring provides the necessary cash flow for telecommunication businesses so they can continue to provide their services without interruption.
With invoice factoring’s versatility, government contractors can also benefit from this type of funding. As long as the contract with the government stipulates that the invoice could be assigned to a third party. Then, government contractors could benefit from invoice factoring. While government invoices are legitimate and verifiable, they usually have non-standard payment terms. In most cases the contractor cannot wait for those funds to come to term. Instead of waiting for the invoice to mature and pay, a factoring company can purchase those invoices upfront and wait for the payments to collect so the contractor can continue to conduct its business in a timely manner.
Invoice payments for landscaping enterprises usually have lengthy terms. Most landscaping businesses have more than one project going on at any given time so there will always be a need for consistent funding if they are going to expand the business at some point. While the landscaping enterprise can offer shorter payment terms, or simply require payment upfront, it could potentially lose their customer base which is also trying to manage their expenses by taking advantage of invoice payments with long terms. Invoice factoring can provide the landscaping enterprise with consistent funding so it can continue to offer extended terms to its customers.
Consulting firms are project-based businesses that rely on consistent income to keep the business running. However, payment is not always straightforward; sometimes it takes 30 days to 60 days upon completion of the project before payment is due to be made. However, payment to suppliers in the meantime cannot wait. Invoice factoring for consulting firms could help by providing the necessary funds needed to pay suppliers and allow the consulting firm to take on new clients and projects.
The agriculture sector is an essential part of the economy. A healthy agriculture industry is a sign of a developed nation. However, our farmers, especially small farmers, need to meet all of their obligations from many different suppliers at once: from fertilizer to seeds, to equipment, and many others. These expenses generally cannot wait for invoices to be paid. Invoice factoring can help farmers by providing the necessary funding so they can sustain their cash flow by providing timely payments to their suppliers.
As stated earlier, invoice factoring can assist almost all industries. Invoice factoring is a very versatile product, and with its quick turnaround time in funding businesses, every industry is sure to reap the benefits of it.
How your industry can qualify for invoice factoring
Most industries can quality for invoice factoring. All the business needs to do is complete and provide the necessary paperwork requested by the factoring company. It is important that the business provides all of the information requested and does not hide anything. Especially from a financial standpoint. The business will also be asked to provide a list of its current customers. It is extremely helpful if the business has credit-worthy customers and good payers that are already established. As it can assist in the application and approval process for funding the business. At CapFlow, we make sure that your business benefits from all aspects of invoice factoring. Through our extensive funding experience and our partnerships across many different industries, we can provide businesses in all industries the funding they need to achieve their organization’s success.