The Advantages of Invoice Factoring
Invoice financing, often called factoring, is a useful tool for many businesses. It is a system by which a lender buys invoices from a business at a discount and then collects from the business’ customers. For the company, there are some significant advantages.
The risk of delayed payments or non-payment of invoices can be significant, especially for relatively small businesses. Financing invoices can be a good way to ensure that your business will receive the money it needs. This is especially significant with non-recourse financing. It is a consistent and unlimited source of funds. Just keep selling and you will get money right away.
2) Credit Information
When you finance your accounts receivable, your lender will examine the credit of your customers. Leveraging this relationship can be a great way to minimize your risks when you extend credit terms to customers. Rather than just going on faith that they will pay their invoices, you can use your lender’s credit information to mitigate your risk.
3) Manage Costs
Financing your receivables makes cash flow operations simpler. Simplicity can help you minimize your costs. You can invest your funds more efficiently and avoid complex bookkeeping. Instead of worrying about long payment terms, you can just focus on growing your business with money in your account now. It is a great way to reduce your costs by avoiding the risk of nonpayment.
Having high receivables means that you have a lot of assets tied up in your invoices. This can really harm your cash flow and leave you in a difficult situation. When you factor your receivables, you maintain a smoother cash flow process. You don’t need to worry about an illiquid balance sheet. Instead, keep your coffers full even when your customers haven’t settled their balances yet.
5) Save Time
Chasing down customers for payments takes a lot of time and energy. By financing your receivables, you can avoid all this. Your lender functions as an outsourced accounts receivable department. All you need to do is focus on growing your business and bringing in more sales.
6) Stronger Finances
Invest in your business’s lasting success. When you have lots of outstanding balances, you are always held back by waiting for customers to pay. Invoice factoring is the simple solution to this problem.
Get started today and factor your invoices for simpler cash flow. It is the smart way to fund your business with an unlimited source of capital.