3 Misconceptions of Factoring Clarified

If there is one thing that deters companies from pursuing the generation of cash flow through invoice factoring, it is a misunderstanding of the process. The best factoring companies make accounts receivable financing a simple process that benefits your business. Dispelling misconceptions about factoring is an easy way to understand the advantages to this popular cash flow solution.

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Misconception 1: Factoring Means Your Business Is Failing

Some people equate factoring to money troubles, but this is far from the case. When you sell invoices, you are essentially outsourcing your accounts receivable. It’s true that this is a great way to generate quick cash when you’re struggling, but it’s also a good way to make sure your successful business remains successful. When your invoices are paid on a 30-, 60-, or 90-day cycle, there are times when cash can be stretched thin. Factoring allows you to continue business without any hiccups because you’re not waiting for those payments to come in. The best factoring companies provide services to businesses with a bright financial future, so the selling of invoices can actually be the sign of a healthy company.

Misconception 2: You Will Lose Customers

There are businesses under the impression that their customers will leave them if they receive factoring services. You retain the relationship with your customers. As your factoring company, we simply receive and process payment from them. In fact, there is little to no need for contact between the factor and your customers. Chances are high that as long as you are providing quality goods and services, your customers won’t mind or notice the change.

Misconception 3: Factoring Is Expensive

Yes, accounts receivable financing comes with a cost that depends on the company to which you sell. Like any other business decision, it’s important to weigh the pros and cons. Do you pay another company to handle your accounts receivable, or should you hire staff in-house to do it? Depending on the size of your company, factoring is far from expensive and is considered part of the cost of smart business. We will prepare a rate proposal specific to your company’s needs.

There Is a Place for Factoring

There are many misconceptions about factoring, but the truth is that the best factoring companies have a solid place in the business sector. You can fill out our online rate form to learn more about accounts receivable financing from Universal Funding and the many benefits it poses for your business.

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