What are the benefits of using factoring invoices?
The business owners are experiencing the cash flow. But with banks securing the extensions of credit the options of it are reducing. The accounts receivable funding is getting stronger for the years to come. Invoice factoring options are even more adaptable and cost less than ever before.
Factoring companies will fund a cash payment on the invoice amount. Collect the payment from your customer and release the reserve balance less the factoring fee to you.
Other than a loan, factoring is the buy of outstanding invoices at a discount price. This is the difference between selling invoices and obtaining credit. It plays a key role in most of the benefits of factoring.
Benefits of Factoring Invoices
Fast access to cash
The factoring process is fast and easy. With the funds that are provided within 24 to 48 hours on approved invoices. The initial setup is from 5 to 10 days from the receipt of the factoring application. This is much faster compared to the months it takes in banks to decide on the business loans.
There are no such long term contracts, minimums, or maximums. You can select and pick how often and what are the invoices you want to factor out. The factoring is designed to grow with you. The sales increases so do your access to the funding.
Having cash flow without a debt
Factoring is not a loan. This does not add to the liabilities on your balance sheet. Which means no monthly loan payments and you have a clean balance sheet.
The cost of factoring invoices has lowered over the years. The advances that are available up to 95% and the fees for as low as 1.5%. The fees depend on what industry, number of invoices, volumes, and advance rates. And how long does it take the customers to pay?
Reduce the stress
There is no waiting on your customers to make the payments so you can make yours. Paying bills, meeting the payroll and taxes on time. This without any hassle about the late fees or any damaged credit.
Stay in control
Factoring such as florida factoring companies does not dominate on how you spend the funds. And there are no other requirements to buy any other assets or equipment.
Having strong financials are not required
You don’t need to have good credit. Such as years in the business, or how strong the financial history to qualify for the services. The factoring looks to the durability of your customers on paying the invoices.
Expand the bottom line
Some companies are using factoring to increase the fund or profit growth. To take advantage of early payment discounts. You need to negotiate bulk discounts from the suppliers. Increasing inventory for huge orders or adding the staff to have the fund expansion. This is possible to use factoring to make or save money more than the factoring costs.
Extending terms to customers
By increasing sales with the ability. To offer credit terms to new or many customers without damaging the cash flow. The factoring will help you underwrite your new or any existing customer’s ability to pay. To avoid it by extending terms to high-risk candidates.