One of the first questions a business owner will ask when deciding whether or not to factor invoices is, “What will my customers think?”
That is a valid question and one that invokes more fear than needed.
The truth is, this is one of those worries that is really not an issue.
Invoice factoring, or accounts receivables financing, reveals intelligence and flexibility in dealing with a challenging economic climate. It is normal for a smart business to have multiple lines of credit, right?
Of course it is. And factoring could be thought of as nothing more than another line of credit. It provides money much faster, with significantly less paperwork, than traditional bank loans. In fact, having a factoring arrangement can even give you an edge over competitors. When you factor, you will be able to manage your cash flow and avoid cash crunches when the unexpected happens.
And, truthfully, many of your customers, especially larger ones, are already aware of factoring because they use it too.
Many small, mid-size and large companies use factoring to increase their liquidity and control cash flow. Smart CEOs and owners use factoring as part of a growth strategy; especially when sales increase too fast for a traditional bank to finance.
Your customers can even benefit when you factor because they can choose to take advantage of payment terms that might not otherwise be offered to them.
If you remain nervous about what to say to a customer about your factoring decision, tell them you’ve chosen to factor your invoices to keep up with growth. You can take the opportunity to explain that factoring is an important step for your business and will allow you to continue providing your customers with the great service they have come to expect.
After all, they will still deal with you and your company just as they have in the past. For your customers, the only real change will be the remit-to address on the invoice. Hardly a big deal!
If you still have concerns, contact Universal Funding today. Our experts can discuss ways to inform your customers and make factoring work positively for you; and them.
-Travis Griffith