The factoring company pay upfront for the accounts receivable purchased. This results in immediate cash flow. Bank loans typically take 1-2 months while invoice factoring deals can be funded within 3-5 days.
One of the biggest monetary worries of Americans is falling into serious debt. Many of these are small business owners or entrepreneurs. With invoice factoring, your business will not incur debt that must be repaid as is the case with a bank loan. Selling your accounts receivable means debt figures don’t stare back at you from the balance sheet, even if you are cash crunched.
One of the main reasons for small business failure is insufficient capital. It is important for a business to have sufficient funds to satisfy upcoming operational expenses. Selling accounts receivable will not tie up your working capital. You grab all opportunities coming your way!
Don’t chase unpaid invoices. Save valuable time. Collecting receivables is time-consuming. You need to send email reminders and make tons of phone call to collect money due to you. But selling receivables to a third-party eliminates the need for in-house debt collection.
The time saved can be better invested elsewhere!
Businesses are required to place a person in charge of accounts receivable. When you sell your invoices to an invoice factoring company, you don’t need a dedicated in- house personnel to manage the accounts receivable. This job is done by the factoring company. This reduces your overhead!
With adequate cash reserves, you can pay all your vendors and creditors on time. Your market reputation goes up.
The impact of bad debts on your bottom line can be massive. Selling your accounts receivable will save you from the risk of customers not paying their debt. Factoring company inherits the risk, once accounts receivable are purchased by them. It’s not your headache anymore!
Once collection is outsourced, you can maintain strong relationships with your customers. Happy customers are profitable customers.