Although there are many benefits to business factoring over getting a line of credit, consider these…
3 Ways Invoice Financing Can Help Your Business
Factoring Benefit #1 – Take On The Slow Payers
What?!? Purposely take on accounts that have slow payers? That is right…
Everyone who deals in any significant volume has a couple of accounts that just kill the cash flow. It is not that there isn’t plenty of profit; it just takes the customer forever to pay.
The problem is that these accounts can often be your BIGGEST accounts. Or, if you are like many other small businesses, you may have passed on a large order because you knew the client simply pays too slowly.
With factoring, you can afford to wait for the slower paying companies by taking an advance on the invoice and increasing your sales volume.
Factoring Benefit #2 – Pay Your Suppliers Early
Hey, everyone has a cash flow issue – some worse than others. But not one of your suppliers would mind getting paid a bit sooner.
The best part is, that paying your suppliers on time will enhance your company’s reputation and all the while, your bank account.
Most suppliers offer an “early pay” discount. If you are factoring invoices, you will have a stable cash flow allowing you take finally take advantage of these lucrative discounts.
Factoring Benefit #3 – Avoid Bad Deals
One of the best parts about working with a factor company is their ability to help you “pre-screen” potential clients.
Not only will your factoring agent tell you whether the new account is a good risk when it comes time to factor invoices, they can also help you avoid the bad companies altogether. In turn, losing less on bad or unpaid invoices will go a long way to your bottom line.
No matter what your reason, Factoring account receivables is certainly worth checking out when debating between lines of credit or simply selling invoices.
What do you look for in a good factoring program? Check out this list for comparing factoring companies.
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