5 Industries That Can Make the Most of Invoice Factoring
When your business experiences significant cash flow fluctuation, it can be frustrating and stressful. The variations are mostly due to payment gaps in the account receivables. In other words, several types of business do not get funds or finance fast enough when they complete their projects and services. This is when businesses need a long-term financing solution that can help them maintain their cash flow and keep operations running.
Factoring services, in this regard, are immensely helpful when businesses need to bridge the gap between cash flow and upfront cash advances. Luckily, many small businesses and startups opt for invoice factoring to benefit from flexible financing solutions. They factor their invoices to receive short-term or long-term funding to improve their cash flow. If invoice factoring sounds new to you head over to this resource page to learn more; now here are some, but not all, of the industries that can make the most of this alternative funding option:
The apparel industry is, without a doubt, a hard nut to crack, especially during the initial stages. You have to compete with existing established boutiques but also various e-commerce businesses that receive all the payments at the time of purchase. To sustain in the mainstream business, you have to manage a healthy cash flow and keep your operations running smoothly. Although the cash flow keeps fluctuating for seasonal businesses, an apparel company must maintain traction to stay in the game. If this does not happen, the business might need to stop taking new orders.
Entrepreneurs know that they need money not only to fulfill the current orders but also to cover the costs. If the business opts for invoice factoring, they do not need to stop for new orders. Using apparel invoice factoring, the company receives the payments due to previous orders. The business, thus, has sufficient capital to buy inventory, update equipment, cover payrolls, and stock up on inventory. This process eventually results in steady business as customers receive their orders on time.
There is no denying that the transportation industry is enormous. Millions of rail cars, trains, vehicles, and vessels take goods across a giant transportation network. The good news is that invoice factoring can benefit businesses operating within this vast network. Many transportation businesses use invoice factoring to manage large fleets, freight brokers, and owner-operators.
Moreover, freight factoring is a wonderful solution for the transport industries when it comes to increasing cash flow and making payment times predictable. Bank loans are relatively a problematic option, considering the fact that businesses require established credit to qualify for the funds. The option is a non-starter for fleet owners who just started the business or are going through a rough patch. Freight invoice factoring allows businesses to receive money for their invoices in advance without having to take loans. Businesses can use the option to make payments for drivers, repairs, and gas.
The third industry that can take benefit invoice factoring is manufacturing. Inconsistent cash flow is one of the common problems that even giant manufacturing corporations face. The worst part of insufficient cash flow is that it makes accomplishing simple goals impossible.
Taking major loans from banks may help manufacturing businesses get the funds they need to manage cash flow, but it drives the business into heavy debts. Using invoice factoring to support manufacturing business can help entrepreneurs avoid debts and meet their cash flow requirements to buy equipment, repair parts, and maintain payroll.
With tons of innovative advancements, the technology industry has become one of the highly competitive markets, especially for startups. Many technology companies have to survive in a saturated market to provide their services. Besides this, businesses need to maintain a steady pace and make quick upgrades to the software and hardware. All of these changes require significant capital.
Not only this, technology companies try their best to retain their top talent. Invoice factoring, thus, provides a great solution to businesses in the technology industry to mitigate payroll issues via unpaid invoices. Technology industries can invest the capital in training their staff, and in upgrading their software to benefit other industries. By using invoice factoring, technology companies use their own capital instead of applying for bank loans.
You might not know this, but permanent and temporary staffing companies rely greatly on predictable and steady cash flow in order to meet expenses. A small staffing company does not have readily available resources for capital and funds as compared to well-established competitors. The common reasons for this predicament include:
Insufficient earnings to meet the bank underwriters
Poor personal credit
Poor credit history
Invoice factoring serves as an easy cash flow solution for staffing companies. The factoring companies convert invoices (awaiting payments) into cash. These funds can help staffing companies in:
Replenishing inventory (with Porter Capital's solution)
Covering their payroll
Meeting existing operating expenses
Meeting the needs for growth and development
All of the above means opting for invoice factoring can be a great financing alternative when your staffing firm or nurse placement business needs quick capital to meet expenses.
Final Thoughts on Which Industries Can Benefit from Invoice Factoring
Overall, with a significant rebound in the economy, many industries adapted to take on new challenges. To incorporate the change, industries need new financing avenues other than conventional credit unions and bank loans. This reason is why many businesses opt for invoice factoring to stabilize their cash flow and meet the existing business requirements.
Thus, the five industries mentioned above can rely on invoice factoring to survive in a rough economic phase. Industries like technology, transportation, and pharmaceutical can greatly benefit from the easy-going and flexible funding process of invoice factoring. You can choose a reliable factoring company, like Porter Capital Corporation, for your instant business funding needs; if your business needs working capital - apply by clicking here.