Updated: Mar 2
When a small to medium-sized business requires working capital or access to a bridge-loan with fast financing and flexibility, factoring companies can offer the needed cash flow at very competitive rates. Many companies opt for invoice factoring when they need instant cash on their company’s outstanding B2B invoices. Reliable and reputed factoring companies like Porter Capital take on the responsibility of waiting for pending accounts receivable or invoice payments. In return, it provides businesses with timely money to run the operations or invest in new opportunities. Factoring is undeniably a fast and flexible financing alternative to lengthy conventional bank loans or high-interest MCAs. However, there are plenty of reasons why businesses choose invoice factoring as one of the reliable financing instruments. Below we have rounded up some of the key benefits of opting for invoice factoring as a financial instrument for your business.
Escalates Business Growth - One of the top reasons that make invoice factoring a financial instrument is its capacity and flexibility to help your business escalate its growth at a faster pace. If your small business was self-funded or you used to rely on the bank loans, switching to factoring is one way to speed up the growth process. It is because factoring is easy-to-setup as compared to conventional bank loans or other business funding alternatives. You can qualify for a factoring account and receive cash within days. Unlike traditional bank terms and conditions, invoice factoring does not have any amount limit when it comes to receiving funds from an invoice factoring company. The factoring volume and capital structure can increase hundreds of dollars to thousands of dollars as it maintains and boosts cash flow within months.
Offers Back Office Solution - There is no denying that collecting pending payment from clients or customers is taxing on any company’s overhead and time. When you choose a factoring company as a financial instrument for your business, it takes over the role of collection specialist. It follows up with the customers who have due payments until they pay the invoice amount. Many factoring companies like Porter Capital offer businesses online dashboards to help them track real-time payments of their customers. Online and straightforward access to your data is one way to free up time for your business to serve the clients in a better way, seek out various business opportunities, and, most importantly, getting paid on time.
Provides Easy Working Capital - New companies and startups often need finance to establish. But with no balance sheet, history, and cash-flow statement, they struggle to qualify for cash-flow or asset-based lending. Invoice factoring, on the other hand, does not follow these requirements as it provides funds based on the credit history of the customers. The factoring company examines the credit scores of your customers, their overall financial health, and payment patterns before agreeing to your financing offer. Precisely, how long a business is working in the industry is not a concern for a factoring company.
Offers Better Finance Options than Debt - As mentioned above, invoice factoring is not a typical loan. The funds come through the accumulated invoices of your business. The factoring company receives its investment amount as soon as customers make the full payment. If you opt for recourse factoring, the clients assume the collection risk if the customer defaults on payments. However, most of the factoring companies allow businesses to work off the amount by holding a portion of reserve payments or cash advancements.
Helps You Find the Better Customers - The factoring company has access to days-to-pay information and credit data of many companies and businesses that can become your potential customers. Some factors work with a rating system for different companies in the same industry, meaning that by using this resource, you can make calculated and informed decisions about not only your existing customers but also the new ones.
Improves Cash Flow - This is, without a doubt, one of the key reasons why both startups and medium-sized businesses choose factoring as a financial instrument. It is a convenient solution to boost and stabilize your business’s cash flow. When a company provides a service or product on credit, the customers generally takes 30 to 60 day to pay, which can cause cash-flow problems, especially if you are a startup or need a steady investment to buy inventor or to pay your staff. Invoice factoring, in this regard, provides an advance payment to your business within days. Factoring allows you to build up cash-flow quickly and potentially buy equipment, cover expenses, and add employees to help you establish your business.
Offers Additional Business Services - The benefits of invoice factoring are not limited to just improving your business’s cash-flow. A trusted factoring company can handle collections that are due to customer invoices. And that can save your company’s whole lot of time and resources.
Outside of these, and other, reasons, a factoring company also provides credit information to the clients to help evaluate whether or not a new contract should be agreed upon, whether it's a staffing firm or manufacturing conglomerate. If you choose one of the best working capital companies, like Porter Capital, it gives your company access to premium customer service. Also, it offers online accounts that allow businesses and companies to monitor their payment trends and factoring volume of the customers. In addition to that, the factoring company can help find business representatives who can address their concerns and questions regarding their factoring accounts. That is what makes choosing a factoring company that offers additional services like the ones listed above so critical; helping your corporation grow and make better business decisions.
Porter Capital Corporation, for example, excels in providing value-based services to its clients, and that is what makes it the right choice for your business. The comprehensive factoring programs meet your cash-flow requirements and provide your business with tons of opportunities to boost profits. Overall, invoice factoring, with its easy-to-process cash requirements, makes one of the easiest ways to receive instant funds for your business. From stabilizing cash-flow to providing secure working capital, invoice factoring makes the best financial means for your business; if you are ready to get cash for your overdue or outstanding invoices just fill out the form below and someone will be in contact soon.