Some businesses have avoided invoice factoring because they’ve heard negative things about it, or simply because they aren’t aware of the facts involved with the practice. The truth is, invoice factoring can be highly beneficial to your business and can put cash in your hands to keep a positive cash flow, rather than waiting to collect on slow-paying customer invoices.

Factoring Frees Up Cash

When you think about it, your company probably has an enormous amount of revenue tied up in invoices at any given time. If you had that cash in your hands, you could put it to great use meeting payroll, buying inventory, covering business expenses, or even helping your business to grow. Factoring will put that cash in your hands immediately while allowing the factoring company to collect from your customers.

You Don’t Need Excellent Credit

If you’ve been thinking you need a good credit rating to qualify for invoice factoring, that’s not really true. It’s much more important to a factoring company that your customers pay their bills on time, and your personal business credit history is much less of a factor. Companies which haven’t been in business for very long, or which have less than perfect credit, will not qualify for a bank loan, but might very well be good candidates for invoice factoring.

No Long-Term Commitments

For the most part, factoring companies only require that you sign contracts extending for 3 to 6 months into the future. While you can sign longer contracts, it’s certainly possible to commit to a much shorter term, especially if you’re new to factoring and want to find out what it’s all about.

Less Focus on Accounts Receivable

Your company personnel won’t have to focus as much on accounts receivable when it’s the factoring company that will be responsible for collecting on your company invoices. That will free up your personnel to do more business-centric processes, and forego all the time that would have been necessary for sending out collection notices and making calls to slow-paying clients.

Is your company considering invoice factoring?

If so, we may be able to assist you. Contact us at Simplicity Capital Finance with any questions you may have about factoring, or about how to get set up so that your business can enjoy the benefits of invoice factoring in the near future.