Businesses often require outside financing in order to strengthen cash flow and foster further growth. One method of funding that works well in many industries is the factoring of your accounts receivables. Here are some of the benefits of invoice factoring.
Improve Cash Flow
The cause of uneven cash flow for many businesses is unpaid accounts receivables. When you factor your invoices, you free these funds so that you can use them for employee salaries, equipment, inventory, and other ongoing expenses. The additional cash also puts you into the position of being able to take on new orders.
Obtain Financing Despite Imperfect Credit
If your company’s credit rating prevents you from obtaining a traditional loan, you can still qualify for invoice factoring. This is because the lender is concerned more with the creditworthiness of your clients with unpaid receivables than with the credit rating of your business. Even companies that are relatively new or have imperfect payment histories can factor their invoices.
Customize the Terms to Suit Your Business Needs
Factoring companies work with businesses in a variety of industries, and they are accustomed to creating terms that suit the needs of individual companies. You have the option of a short or long-term contract depending upon your situation. Because interest-only accumulates until clients pay their bills, the fees are generally reasonable.
Receive Online Support
The majority of factoring companies provide you with online access to your account details. This allows you to monitor the accounts receivables you are factoring, the payments that have come in, and which clients are delinquent. If you have any questions, you can contact the lender.
Outsource the Collections Process
Once you have begun the process of factoring, the lender takes over the processing of payments and collections of unpaid invoices. This allows you to focus on managing the prosperity and growth of your company.
For more advice on factoring your accounts receivables, get in touch with Ambition Funding Solutions.