subject: Can Factoring Invoices Help Your Business Grow? [print this page] If you own a business that sells products or services to commercial customers or to the government, you must be familiar with the maxim hurry up and wait. After you have delivered your services, that is what you always end up doing. To get your invoices paid, you will hurry up and wait up to 60 days. But then you still have to cover the rent, employee salaries, and supplier payments. That's right, hurry up and wait.
But this is a major challenge if you are a business owner. It will significantly slow down your growth. Why? For one thing, it's unlikely you can afford to wait months to get paid if you take on a large order. It's also not likely that you can afford to cover the rent, pay the staff, and buy the supplies. This is why this is a major challenge. You can even be driven out of business because of this.
But even in the face of a financial challenge, what should a business owner do? Most will hope for a business loan and go to the bank. But business loans are very hard to obtain and not very flexible. Also, rather than your future opportunities, banks would give loans based on your business past. A financing product that will be focused on your true sales potential is what you will often need. That product is what you call invoice factoring.
Invoice factoring will provide you with funds right after you invoice your client because it eliminates the 60-day payment wait. Think about it. You deliver your product or service to your customer. You no longer have to wait 60 days just to get paid because you will receive payment in 2 days. Do you know how quickly you can grow? Or how many clients you would be able to take on?
And how does factoring work? Actually, it's quite simple. Once your product has been delivered, an invoice needs to be sent to your client as well as a copy of the factoring company. The factoring company advances you a substantial portion of your invoice, usually within a day.
The factoring company's advance gives you the breathing room you want and the money you need to pay business expenses and take on new opportunities. This allows you to grow your business. The transaction is settled once your client pays their invoice to the factoring company.
It's easy to obtain factoring. The biggest requirement will involve you doing your business with solid credit worthy customers. So, if you need financing and do business with great customers, consider factoring your invoices.
