Recently a large precision engineering company had enjoyed a period of phenomenal growth but soon that company faced the reality of that growth: a large tax demand was threatening to undermine all the success the company had recently achieved.
It wasn’t that the company lacked financial resources to meet its tax expense; the funds were merely tied up in unpaid sales invoices. The company found the remedy through invoice factoring and was advanced 80% of its accounts receivable, which got the company immediate cash. This funding method, also known as factoring, allowed this engineering firm to get current with its taxes and continue its healthy scale of growth.
Invoice factoring, unlike other forms of finance, is not a loan. The process does not create debt or add liability. What it will do is convert your company’s accounts receivable into immediate cash. Because you are not borrowing money, your credit rating is not a significant issue. This means if you are a young, growing company without an established track record, or if previous cash flow problems have tarnished your credit rating, you can still qualify for invoice factoring.
Accounts receivable financing is a cash management tool that businesses use to build credit and steady cash flow. Invoice factoring companies allow businesses to remove credit limitations and extend terms they would normally not be able to handle.
Factoring is one of the most flexible financing options and the only one that continually grows with your company. You are not limited to pre-approved credit lines, there is no waiting for loan committees, and you don’t have to go through a complicated and redundant loan application process as your volume increases.
If your engineering company has experienced similar growing pains because of the lack of cash flow, call Universal Funding at 1-800-405-6035.