Minimizes Loss Risks
With conventional business loans, all business assets are used as collateral. Using a factoring company to finance invoices only encumbers accounts receivable as collateral and minimizes the risks of losing equipment, or inventory not related to the invoice or real estate assets. Also, there is no need to give up equity. While some business loans provide cash based on equity, using them is like starting over and losing part of an investment. By using receivables factoring instead, business owners can protect their equity and get through temporary cash shortages. Selling equity during a cash crisis can be a detrimental choice for a business on a long-term basis.
Helps Small Businesses
1st Commercial Credit is a factoring company that helps out small business with minimal sales volume. It is difficult for small businesses that are newer and have lower annual revenue to qualify for conventional loans or lines of credit. Also, small business owners find that it normally costs less to use factoring instead of trying to put expenses on business credit cards.
How An Invoice Factoring Company Helps Businesses Offer Customer Credit
A benefit that is big enough to warrant a more thorough explanation is customer credit flexibility. Today, many companies lose potential customers to competitors because they lack the ability to extend credit terms. While offering one credit option to clients is great, offering two or more payment term choices is ideal. Customers are more likely to make purchases when they feel comfortable, and a delayed payment may be easier for many clients to handle for a variety of reasons.
To better understand this, consider a government client that is adamant about having a 60-day payment term and a commercial client that demands a 30-day payment term. If the potential clients both promise loyalty to the business, not offering payment terms means that the clients will likely look elsewhere. With factoring, business owners have the option to factor invoices quickly after the services or product orders are fulfilled and the invoices are issued. A business owner receives quick cash, and the company that factors the receivables waits for the customer payments to arrive. This makes it easier to comfortably offer payment term options to clients without worrying about stifling cashflow.
Companies that have the ability to offer financing or delayed payments have more growth capabilities. Also, factoring companies can help businesses with scalability needs. Their cash offers are based on invoice amounts, and factoring providers can offer more cash based on the growing number of invoices in the future.
A common concern that business owners have in choosing a company that factors receivables is client creditworthiness. Determining the creditworthiness of the clients ordering the products or services can be a major undertaking to handle. However, the good news is that the chosen factoring company typically performs customer credit reviews internally. This eliminates another responsibility and adds a bonus to the list of benefits of invoice factoring.
Factoring in 3 to 5 working days.
- We require a 2 page online application
- Signed proposal
- An accounts receivable aging
- Invoices with backup documentation
- Last 3 month bank statements
- Photo ID and Voided Check
- Master service or distribution agreements
- Signed Invoice Factoring Agreement
Get funding Same Day Once Setup
- Every client is issued an online account
- Upload invoices & backup with app we provide
- Get Funded within 24 hours after verification
- Add new credit worthy clients as you grow
- Free credit analysis for new clients
- Purchase order financing available after setup
Invoice Factoring Eliminates The Need To Get a Bank Loan
It is an organic line of credit that grows with the increase in your invoiced sales. You are never over-extending your company's finances, and you are allowing your company to grow at a natural pace.
Business owners realize that there is no need to borrow money from a bank in order to offer credit terms to customers. Factoring receivables is different to a receivable loan offered by a bank. It is considered an ongoing purchase of the invoices at a discount and not a loan. This enables the business owner to obtain immediate cash flow collateralized by the outstanding receivables without going through cumbersome paper work and waiting weeks for a decision.
A Factoring Company for Small Business is always needed
Are you the owner or operator of a small business? If you are, you are most likely experiencing low levels of available working capital from time to time. Your company's regular supply of cash flow that is necessary for everyday operations may be difficult to predict or maintain. Especially in today's uncertain economies around the globe, many small business owners and entrepreneurs are finding it increasingly difficult to run successful enterprises, particularly with rising costs and high interest rates for repaying inventory costs, supply orders and bills. A professional factoring company that offers small business financing is most likely the very best solution to such monetary imbalances and deficits.
How can a factoring company solve my small business financial problems?
A reputable factoring company that specializes in small business financing can quickly help alleviate the financial shortcomings of your small business. If you run a production and sales enterprise, a good small business factor may offer inventory funding or purchase order funding for more available cash flow to use throughout the year. 1st Commercial Credit can offer additional lending products alongside the factoring arrangement, and will be repaid via accrued amounts in your accounts receivable from customer payments for goods.
What other services are provided to small business by a factoring agencies?
A quality factoring company may also provide additional financing options for small business owners. Aside from inventory and receivables funding, a professional factoring company often will offer credit security and collections management to your business. Of course, the added credit monitoring will increase the credibility and standing of your business. It will also provide stability and allow you to expand operations more easily.
What types of small companies are most frequently financed by factoring agencies?
Factoring companies provide financing services to numerous types and sizes of business. Of course, the majority of small manufacturers and sales enterprises need receivables funding, collections management and other types of financial services on a regular, ongoing basis. In addition, some sales businesses with seasonal inventories may need periodic funding throughout the year in order to increase production rates during manufacturing months and to ship products and promote sales during selling seasons.
Other industries and types of companies that may also enlist the services of high quality factoring agents to strengthen and grow small businesses while balancing yearly financial needs include merchandise transport and shipping companies, local trucking enterprises, employment staffing companies (especially temporary staffing agencies), and all kinds of services businesses. For example, catering companies, car and limousine services, office equipment installers, residential or commercial cleaning services, and greenhouse plant suppliers for homes and businesses may all have need of financial support through factoring.
In today's modern laser-fast world of business transactions, small companies of all types can benefit greatly from the expert advice and financial services of high quality, experienced factoring agents. With the additional support and assurance of regular, dependable funding, credit security and collections management, numerous varieties of small enterprises can focus on gaining higher levels of visibility, credibility and sales or service contracts. In addition, these small business owners and operators can focus more time and attention on growing their client bases and expanding their markets for the benefits of increased profits and success.
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