One of the most well-known advantages of invoice factoring is the ability to acquire cash fast and securely for completed work or delivered services rather than waiting 30+ days for customer payments to come in. Factoring offers many other advantages, some of which you may be unaware of. Factoring can reduce the likelihood of customer bankruptcy, doesn't add debt to your books, helps with collections, and provides many other significant benefits for your business.
Accounts receivable financing is a method of financing gaining popularity and used by an increasing number of B2B companies to stabilize and accelerate cash flow. This financial alternative can provide reliable and sufficient working capital, enable growth and expansion, and improve the overall payables cycle, resulting in vendor early payment discounts and favorable pricing. Other advantages associated with factoring include:
Factoring accelerates access to working capital: factoring gives immediate (within 24 hours) access to capital for goods and services you delivered and saves you waiting 30, 60, or 90 days that will take for an invoice to be paid. This fast funding process is highly beneficial for businesses needing immediate working capital and looking to expand their operations quickly. In contrast to a bank loan, which can take a long time to apply and be approved for, factoring has a fast and straightforward process and will give you access to the funds right away. A business usually cannot wait long if it already needs cash flow, and we know that.
Factoring saves you time and money: Working with a factoring company will save your credit and collections department a lot of effort and time, which will also lower your operating expenses. We will assign specialized staff with extensive knowledge about your industry and who will become familiar with your specific needs. We will also take care of the billing and collections process so you can focus your time on other areas of the business instead of chasing unpaid invoices.
Bring in money without additional new debt: Debt can be risky, especially for new companies. Factoring allows companies to receive the needed cash without relying on an expensive loan. Invoice factoring won't create any debt because it's not a loan. Your business can enjoy having the funds without any amount to be paid back. A factoring company purchases your open invoices, and they give you a sum upfront for them. The factor will return the remaining percentage to you when your customers pay their bills, minus their factoring fee.
Factoring is an excellent option for companies having trouble qualifying for a bank loan: Obtaining a bank loan has always been challenging, especially for smaller or newer businesses. Today, it is even more challenging because banks have a long list of strict requirements and demand collateral. There are many limitations for businesses to qualify for bank loans. For example, if a company has not been in business very long or has had problems reflected in the credit history, then the likelihood they will receive a bank loan is small. Qualifying for factoring is much easier. The main requirement is that the company has invoices for services or goods sold to creditworthy customers.
Great for growing businesses that want to retain control: a line of credit secured by accounts receivable provides immediate cash flow solutions for business growth. Companies need to expand sales and marketing, add products to the inventory, increase production and hire more staff to achieve growth and bring their operations to the next level. Additionally, business owners have the financial flexibility that you won't with most banks. You can choose which and how many invoices you want to factor and what you will do with the cash received from it.
A factoring company (or accounts receivable factoring) converts invoices sold on credit terms to immediate working capital at a discount. It has become a simple, fast and easy way to access business cash flow. In comparison with a traditional bank loan, a company that factors receivables has a quicker approval process.
1st Commercial Credit is a factoring company that specializes in evaluating accounts receivable and can make a prompt approval decision. The documentation requirements are not as lengthy, and the main requirement is that an applicant has invoices for work or orders that have already been satisfied. It also helps to have creditworthy customers. As long as a business has been in operation, meets revenue requirements, and is free of liens or legal issues, approval is likelier.
1st Commercial Credit is one of the most recognized factoring companies in the United States, specializing in funding solutions and providing working capital and cash flow to businesses in various industries. We offer financial solutions to small and midsize businesses that banks may turn down for traditional loans. Some of the most popular industries we fund in Louisiana include:
Often companies in the manufacturing sector will deliver a product to a client and not receive final payment until long after. This situation causes some significant cash flow struggles for businesses. Payment delays can significantly impact the ability of manufacturing firms to pay vendors, manage ongoing expenses, and arrange transportation for products.
Additionally, these companies also have other expenses like equipment upgrades, new product lines, and costs associated with expansion, which can drain all cash reserves and leave manufacturing companies in a complicated financial position. Obtaining a bank loan may not be a possible for companies that have had credit difficulties or are already in debt due to previous expansions.
The manufacturing factoring services provided by 1st Commercial Credit can be highly advantageous for these companies in helping them manage cash flow problems, maintain a steady flow of materials to the factory floor, and move products to retail shelves.
Freight Trucking and Transportation
The trucking industry is essential for any economy. In reality, without trucking, commerce would be stopped, and products would never make it to their destinations. Cash flow can be a threat to trucking companies, their operations, and future expansion plans.
These companies often struggle with long wait times for payment but still need to cover recurring expenses like gas and payroll. Many trucking-related businesses don't really know what freight factoring is precisely and how they can benefit from it and use it to solve cash flow issues caused by slow-paying customers.
1st Commercial Credit is a factoring company offering the ideal financial solution to grow your freight business and manage cash flow challenges with freight factoring. We also have one of the most accessible and competitive trucking factoring rates for this industry and can evaluate your situation today!
1st Commercial Credit can help equipment vendors and buyers obtain the financing to purchase equipment and tools to grow their business and improve efficiency. We are an established and experienced transportation and trucking equipment financier providing new or used transportation-related equipment and machinery so you can expand your trucking fleet or replace outdated equipment.
Our loan programs can be tailored to fit your needs, and any equipment required for your business operation is eligible for financing.
Suppose you are looking for transportation equipment financing for your growing company. In that case, we can provide a wide array of lending programs to assist various industries with funding that is often tough to get through traditional banks and credit unions. We offer our trucking and transportation customers competitive and complete services and industry experience. Our loan programs can be tailored to fit your needs, and any equipment required for your business operation is eligible for financing.
We make the entire application and approval process simple so that you can get access to the equipment and tools you need. Some examples of the types of vehicles and equipment that we finance include:
Partnering with us to obtain financing for your equipment needs is an easy and intelligent decision. We have over two decades in equipment financing and will work closely with you through every step of the process. Contact us today to begin an application and have a decision within a few working days. Once approved, the funds can be in your hands within 24 hours or less!
Invoice factoring is not the same as a loan; it is critical to grasp the distinctions between the two before deciding on one as a financial option for your business. Selling receivables to an experienced invoice factoring business in Louisiana involves selling these invoices at a discount in return for cash. The outstanding bills will then be owned by the factoring business, who will be responsible for collecting payment directly from your consumers. This collection can take anywhere between 30 and 90 days, which is a lengthy period for many growing businesses.
Businesses can seek a traditional bank loan from a bank, but their criteria are often complex and time-consuming. Banks need nearly flawless personal credit and also asks for collateral. If the company meets all of these conditions, the final approval and access to capital may take several months. Factoring enables businesses to get essential cash without incurring debt or depending on an expensive loan with a high interest rate. Working with accounts receivable factoring businesses will give you rapid application and approval processes, quick cash, and a chance for growth.
Obtaining a loan for your business has always been difficult, but it has become even more difficult in recent years as banks have made the requirements and application process even more complex. If your firm hasn't been in operation for very long or has had trouble repaying debts in the past, your chances of getting a bank loan are slim. Businesses that have not been in existence for a long time typically have low average credit and little firm assets. These companies will have a tough time obtaining financing from banks or private investors. In contrast to bank loans, invoice factoring expedites and simplifies the application and approval procedure. It is primarily necessary for a firm to have excellent paying customers and outstanding debts.