Like many other industries, security companies rarely get paid for their services up front. They are left waiting for invoices to be paid after the service has been provided. Terms on these invoices are typically 30,60 or 90 days and it’s not uncommon for clients to wait until the last minute to pay them. This can sometimes leave a security company strapped for cash. The overhead to run a security service company can be a big expense. The invoice factoring process can help bridge the gap between providing their service and receiving payment for it.
Waiting for payment on services rendered can become an issue when a company needs to purchase equipment, deal with an unforeseen emergency or simply meet payroll expenses.
Not having access to the necessary capital to handle any of these situations could prevent a company from accepting new business and drastically slow down business operations. The invoice factoring process provides multiple benefits that can help security companies keep their business moving forward.
Access to Immediate Capital
While most business owners try to keep a certain amount of capital in reserve, sometimes that reserve isn’t enough or has already been depleted while waiting for invoices to be paid. Historically, many business owners relied on bank loans or lines of credit when they were in need of additional working capital. Following the 2008 financial crisis, traditional financial institutions severely tightened their purse strings when it came to approving small business loans and credit lines. More than a decade later, it hasn’t gotten much easier. The application process can take weeks or even months and approval rates remain low.
One of the biggest benefits of the invoice factoring process is that it can provide immediate working capital. This allows a business owner to react quickly to a variety of situations which could have a negative outcome if left unattended until outstanding invoices are paid. In many cases, the application process for invoice factoring takes only a few days and once approved, funding can be received in as little as 24 hours.
Less than Perfect Credit
It’s not uncommon for a security company or any industry to have a hiccup or two in their credit history. Unlike with traditional bank financing, less than perfect credit isn’t an issue when applying for invoice factoring. The invoices to be factored are submitted to the factoring company and they look at the credit history of the clients who owe those invoices. Once the invoices are approved for factoring, the majority of their value is paid to the business owner. The invoices are then paid directly to the factoring company. Once they have been paid, the balance minus a small factoring fee is paid to the business owner.
Growth is the goal of every business and it requires consistent cash flow. Whether it’s new equipment, increasing staff or dealing with an emergency, not having the working capital to handle these expenses can cause business growth to come to a grinding halt. New clients requiring security services won’t wait until a company can afford to hire additional security staff or purchase the necessary equipment. If a security company can’t provide the services the client needs immediately, they will move on to a competitor. Not only is this lost business, but it can also damage a company’s reputation, all of which will negatively impact business growth.
The Invoice Factoring Process with CapFlow Funding Group
Need access to consistent working capital to grow your security service company? CapFlow Funding Group may be able to help. Let’s talk. We specialize in factoring and will work with you to find the best funding solution to provide your business with immediate working capital. We service many different industries with a variety of different funding needs. Contact us today and find out how invoice factoring can help grow your small business.