Invoice factoring has become a very common way for companies to generate additional cash for their business when they need to fill a large order, or want to take on new clients without worrying about having the cash on hand to fulfill the orders. If you are a new or established business that has been considering whether or not this form of financing could be the right choice for you, here are three key factoring invoice benefits.
This is the big benefit, and the main reason that most companies are considering whether or not they should pursue factoring. Generally a factoring company will provide around 70 to 90 percent of the total value of the outstanding invoice in immediate cash, with the potential for additional payment when the customer pays. As your sales continue to go up, you can often access more and more funding. For businesses that operate on a long payment cycle of 30, 60, or 90+ days from invoice to receipt, this can provide a significant cash flow advantage.
When you decide to work with a factoring company, they often take over the process of preparing statements, verifying invoices, and collecting payments from customers. They also can maintain detailed records of transactions and payments to help you identify which customers are most likely to pay on time. This can be a great way to “outsource” your accounts receivable department so you can spend your time focusing on running a business.
Flexibility with Your Cash
In addition to having the cash on hand that you need to meet operational and day-to-day expenses, factoring can help you gain more flexibility with the cash you do have. You can take advantage of bulk buying discounts, sales from suppliers, or even discounts for repaying suppliers early. Lowering your overall expenses will boost profits.
Every business owner knows that “cash is king,” which is why so many take advantage of factoring from companies like Universal Funding. Call us today or fill out our online rate form to see how this type of funding can benefit your company.