Invoice factoring is similar to supply chain financing in that it helps business owners pay suppliers early for their outstanding invoices. However, the mechanics of both financing methods are pretty different even though both ways give an advance against unpaid invoices. Business owners choose to use some or all of their accounts receivable to obtain funds. In contrast, supply chain financing can be somewhat limiting as not all customers offer early payment options. Invoice financing is also called debtor financing, and it includes both invoice discounting and invoice factoring. Invoice discounting is a loan where your pending invoices are used as collateral for a loan, Whereas invoice factoring companies purchase the unpaid invoices outright. This is a significant difference because it provides factoring companies with credit control, enabling them to deal with customers directly, so you don't need to worry about chasing customer payment.
In addition, invoice factoring can be non-recourse or recourse. While there are slight differences between these two financing alternatives, essentially, they allow businesses to access cash flow from their unpaid invoices immediately, rather than waiting until your customer pays for the goods or services. Compared to other types of business financing, invoice financing relies on the business's accounts receivable assets. In many cases, there's no need for a long business history or real-estate security. Having access to the cash flow you need to grow your business has never been easier.
1st Commercial Credit is a factoring company in Louisiana that offers flexible and straightforward alternatives with which you will have access to our online platform to upload or review your accounts receivable for financing.
Benefits of invoice financing solutions:
Quick and straightforward to apply — We offer fast and straightforward application processes and give you access to our online platform so you can check the status of your accounts receivable anytime, anywhere!
Cash flow to grow — Available funds and the staffing agency line of credit will increase with your sales, so you will always have access to the cash flow needed to grow.
Retain control of your business — Continue to handle invoice collections and control your customer relationships.
Flexible financing — Obtain upfront payment from unpaid invoices and relieve your cash flow shortages using our services.
No real estate or business assets pledged — Use your outstanding invoices as collateral, not your precious business assets or property. Our invoice factoring requirements are quick and easy and involve a short online application and minimal paperwork.
If you are a business in New Orleans with many suppliers and the terms agreed with customers for invoice payments are anywhere from 30 to 90 days or more, you could benefit from our alternative financing methods. If you're looking to release working capital from your outstanding invoices, you need to choose an option that will be best for your business, and we can help you with that.
The staffing industry has been increasing payment terms from 30 to 60 or even 90-day cycles over the last few years. Although the staffing sector as a whole continues to grow, increasing business doesn’t mean an immediate increase in cash flow to cover payroll and other expenses. In addition, more established companies have even longer payment terms on average. So, just because business is looking up, it doesn’t mean staffing firms in New Orleans aren’t facing unique cash flow challenges.
Staffing companies, in particular, help boost the economy by thriving on the increasing demand by companies to outsource their hiring. However, as with any type of business experiencing spikes in customer demand, staffing companies are also prone to capital shortfalls, which can pause or put a stop to their ability to grow.
When firms face similar situations, payroll funding can be especially challenging for them while often waiting up to 90+ days for payment from customers. Salaries, employment taxes, and other expenses associated with running a staffing firm still need to be covered each week. If these firms don’t have enough working capital, they can’t afford to take on new customers, making it difficult to expand their business.
Many business owners in need of a reliable source of cash flow cannot turn to traditional bank financing if they don’t have established credit or assets. For many small businesses, taking on debt is not the best solution anyway. Unfortunately, all of these businesses need a reliable source of payroll funding for staff so they can have the time to build up a cash reserve of their own and possibly be in a better position to request financing in the future.
Invoice financing for staffing agencies is also known as payroll funding and offers a financing alternative specifically built for staffing firms by converting their outstanding invoices into immediate cash. It prevents them from waiting long for their customers to pay invoices, boosting the working capital necessary for growth and stability.
The Staffing Factoring Process
Step 1: Continue providing services to your customers
The staffing firm continues delivering services for customers as usual. A significant benefit of payroll funding is that it does not interfere with or change how you do business.
Step 2: Bill your customers
The staffing company invoices the customer for the services provided. The only difference is that it specifies the payment to be sent to a bank account or lockbox held by the payroll factoring provider.
Step 3: Sell your invoices
The staffing company presents the invoice to 1st Commercial Credit for purchase. After purchase, 1stCC advances up to 96% of the invoice amount to the staffing company within hours. The remaining 10% of the invoice value is placed in what is known as a “reserve account.”
Step 4: Collect the final amount
When the customer pays the invoice to the 1st Commercial Credit, the remaining percentage is released from the “reserve account” to the staffing firm after subtracting the factoring fee (typically 1-5%).
The business of staffing firms thrives on the demand of other companies looking to outsource their hiring. However, when the staffing firm places an employee with a customer, it can take anywhere from two weeks to three months to receive payment for that placement.Staffing or temp agencies must wait anywhere from 30-90 days for their invoices to be paid. In the meantime, the agency still must take care of bills and payroll for their employees. That can create a significant cash gap while they wait on outstanding invoices.
In addition, traditional financing is not always possible because businesses in the staffing industry often have a limited operating history or few hard assets like property and large equipment to borrow against. On top of that, bank loans can take months to come through, resulting in further delays when there’s not enough cash to close the gap.
Freight and trucking companies in New Orleans make money by driving goods and products miles and miles to a destination. In reality, the ideal situation is to keep trucks moving with paying loads. Still, the challenge arises when these companies need to find loads and have the working capital and resources to keep equipment moving. Along with finding drivers and loads, funding is one of the top challenges that truck company owners face daily. The great news is that finding a solution to access working capital fast is no longer as difficult as it once was.
Cash flow is hard to manage for trucking businesses because of two simple reasons: slow-paying customers and daily operational expenses. A trucking factoring company provides financial solutions specifically for the trucking industry that continuously needs fast, reliable funding to keep up with costs and repairs in order to keep up with the competition.
Cash flow refers to the money going into and out of business. If your freight company has more money coming in than going out, it is considered to have a positive cash flow. In this situation, the company should be able to pay bills, run operations and receive profit. However, most trucking businesses struggle to maintain positive cash flow and need a funding solution. The trucking industry is known for slim margins, slow-paying customers, and high operating costs. All these factors make it difficult to maintain positive cash flow for any company. For this reason, we offer financial strategies and solutions designed specifically for the trucking industry to improve your cash flow situation and enhance profitability.
Maintaining efficiency is key to any trucking business for profitability. As demand increases, trucking companies need to keep up with operations. Maximizing equipment utilization to operate at maximum capacity is vital to enhanced profits. This means greater operational investments upfront and slow payments from customers as they take their time to settle accounts. Even well-established and successful trucking companies go through periods where their outgoing cash requirements exceed the available cash. With our funding programs, you can take action and set up your trucking business for success.
Freight factoring is fast and straightforward and a more flexible solution to create positive cash flow. All verified invoices are converted into immediate cash, usually within hours. It is the most accessible and easiest way to get paid, eliminating the wait and headaches of collection. Working with a specialized freight factoring company lets you focus on running and optimizing operations rather than chasing customers for payment. It is a cost-effective funding solution that’s easy to manage. Factoring services will give you the following benefits:
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