Invoice factoring offers many benefits to business owners who may be struggling with concerns surrounding debt. As a result of this process, you may find you can avoid a massive debt and put yourself in a stronger financial position. Today we’re going to discover some of the top reasons that companies opt to factor invoices. We know how stressful an endless stream of unpaid invoices can be for business owners, so don’t hesitate to get in touch with us today to learn how we can support you with this issue.
No Debt Will Be Incurred for Your Business
Invoice factoring works to help your business avoid further debt, which is one of the top invoice factoring reasons. Keep in mind that factoring invoices is not the same as taking out a loan. This would require you to pay monthly payments back to the company you took the loan from, which you are unlikely in a position to be able to afford currently. Invoice factoring involves you selling your invoices to a company that specialises in offering this service to businesses. They receive a percentage of the invoice, which immediately gives you cash for your business. It’s an excellent option for companies dealing with the stress of a late invoice payment and may help you to stay afloat while you work through this issue.
Avoid the Hassle of Applying for Bank Loans
Another reason for invoice factoring is that it will stop you from going through the difficult process of applying for a bank loan. Not all businesses are going to be eligible for bank loans, especially if you find yourself in a tricky financial position currently. If you don’t have the right collateral in place, then factoring invoices is likely to be a much quicker and easier option for your business. Of course, we encourage you to check out all of the support on offer to you, but you’ll find this is usually a very convenient option for business owners.
Choose Which Invoices You Want to Factor
One of the reasons for invoice factoring that sets this apart from other financial support options when struggling with debt is the full flexibility you have over this process. You can choose to factor as many or as few invoices as you’d like based on the companies that you opt to work with during this process. You’ll also be able to choose exactly which of the invoices you want to factor, which helps to make this process of raising cash suitable for use at many different times in your company’s history. The company will then fully take over the accounts for these invoices, so you’ll no longer have to worry about the paperwork and hassle of the late payment of invoices. It can take a lot of stress away from your team and help you all to focus on other more important tasks for your business.
Raise Immediate Cash Funds
When dealing with an unpaid invoice, you may have to wait 30, 60 or 90 days for the payment, based on your terms and conditions. The good news about using factoring companies is that they will likely pay you far quicker for the invoices. In fact, many of them offer you cash almost immediately, which can quickly get your company out of any struggles you find yourself in. This can help you to pay off other debts or pay your employees for the month, allowing your business to remain strong for weeks or months to come.
Allow Your Company to Expand
Another common reason that we see businesses use factoring companies is to help with their business growth. This service isn’t just available to businesses who are struggling financially, as it’s also a good option to quickly accelerate your company’s growth. We know that raising funds and taking out loans for your expansion can be a challenge, but getting money in your hands quicker than you would by waiting for the payment date could help you to launch a new product or service immediately. This can be extremely beneficial to your business and help you to take your profits to new levels thanks to this strategic business move.
As you can see, there are many different reasons for a company to factor their invoices. This service is available to companies of all shapes and sizes and can help to support you at many different stages of your business journey. Our team will be here to discuss with you the options on offer to you when it comes to dealing with unpaid invoices. You’ll find that there are many different ways to deal with this common problem, and we’ll be happy to answer your questions on the topic and discover if factoring invoices is a good opportunity for your business.
Read next article: Proforma Invoice VS. Commercial Invoice