Even well-performing businesses can run into cash flow issues. So what’s the quick fix? Invoice financing.
Invoice financing is a simple solution for keeping cash flow in balance. If you’re cloudy on the details, here’s the gist: A business sells its unpaid invoices to a factoring company for a pre-agreed percentage of the invoice. Instead of waiting 30 or 90 days, businesses are paid early and can use the funds immediately. Unsurprisingly, many small and medium business owners are adopting invoice financing into their financial game plan. Here are ten reasons why you might, too.
Reason 1: Every Invoice Issued Is An Instant Pay Day
In a perfect world, customers pay on time with zero hassle. Reality check: customers often pass their deadline and force you to track them down. It’s a nightmare. Connecting with a third-party funder through invoice financing eliminates any worry over late payments by giving you access to reliable cash flow.
Reason 2: You’ll Gain More Control Over Your Cash Flow
You dictate all the rules: How often your business uses invoice financing, the number of invoices you sell at any given time, and when you cash them in. Our auction takes it one step further by opening up bidding to multiple funders. This way, you can size up every eligible offer and choose the bid that works best for you.
Reason 3: Timelines For Funds Is FAST
30, 60, and 90-day net invoice terms can hinder a business’ financial flexibility, especially if customers pay late. Invoice financing provides access to immediate cash before your invoice is paid in full. Think of what you could do by getting funds in as little as 24 hours.
Reason 4: Chasing Customers Is A Task Worth Outsourcing
In addition to delivering an advance on your invoice, factoring companies are responsible for collecting payment. The extra assistance is valuable for SMBs operating with lean teams. Not only do you avoid the stress and hours lost that comes with following up with customers, but you can reallocate time and resources to other vital tasks.
Reason 5: Early Payment Is Available Whenever You Need It
Invoice financing is more than a one-time cash flow tool. How often you sell really comes down to what makes the most sense for your businesses. Many owners use invoice financing regularly to maintain necessary funds in their bank accounts.
Reason 6: Your Financial History Won’t Work Against You
What’s the biggest factor in determining your eligibility? It your customer’s payment history. Funders won’t knock points off for a low credit score or questionable loan record when assessing their investment risk. So for business owners with an unflattering score or financial history, invoice financing is a viable option.
Reason 7: There’s No Need To Put Up Costly Collateral For Cash flow
Since invoices themselves serve as collateral, you won’t have to submit other assets like real estate or equipment to borrow money.
Reason 8: Applying Is Easy
Invoice financing gives SMBs a break from the complicated process that is traditional loans. There’s no long-term debt, stacks of paperwork, or limitations on how much you borrow.
Reason 9: Customer Relationships Improve In The Process
Collection is just another word for administrative headache. Nothing spikes frustration like follow-up calls, and continually reminding customers to pay up can make you feel like the bad guy. Why not hand off collection duties to a factoring company? You’ll unburden your workload and gain time to focus on building stronger relationships with your customers.
Reason 10: Cash flow Is A Shortcut To Future Expansion and Investment
Selling unpaid invoices allows the money you’ve already earned to start pouring in fast. And knowing when money is coming means you can plan future growth with confidence. Need to upgrade your equipment? Hire new staff? Expand your location? Suddenly it’s all possible.
To try out invoice financing for yourself, click here.