Financial strain is something that every company has to deal with from time to time, but that doesn’t make dealing with it any easier. Fortunately, rather than simply waiting around for your business’s luck to change, there are a few different paths you can take to relieve the symptoms. Rather than taking out a traditional loan, more and more manufacturers have been turning to invoice factoring to handle this stress and to get their business back on track sooner. Why do these companies use this method when there are many, more traditional options available? Take a look at some of the benefits associated with using this arrangement:
Quick Funds
If your business is in need of an immediate boost to its cash flow, invoice factoring may just be the perfect solution to your financial needs. Businesses that are under financial strain can turn their outstanding invoices into cash through this method. By selling these invoices to a third party company, they’re able to get the money they need right away (though perhaps at a discounted rate) rather than waiting for clients and customers to pay up what they owe, which could potentially take months.
Easy Approval
Because this arrangement is more like a sale and less like a loan, the approval process is simple. Generally, businesses aren’t expected to put forth any form of collateral since they’re not expected to repay any of the cash they earn, meaning that their properties, equipment and other assets remain safe and sound. This is one of the best benefits of invoice factoring, especially for small businesses that are just starting out. Businesses that have no money for down payments, poor credit history or don’t have anything to offer as collateral yet may find that this arrangement is the most practical and beneficial by far.
Benefits to Cash Flow
While this may not be a direct effect of the factoring arrangement, there’s a definite boost for your cash flow to be found when you choose to take your business in this direction. Because businesses have more immediate cash flow and don’t necessarily have to depend on the timely repayments of customers, they’re able to extend their repayment terms. This makes customers feel like they’re getting a better deal, meaning they’re more likely to remain loyal to the company in the years to come, and bring their cash back for business time and time again.
When you take a look at the benefits, it’s no wonder why small business everywhere are turning to invoice factoring to handle the stresses of slow finances. Learn more by speaking to your professional of choice.