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Invoice Factoring for Small Businesses
Any small business owner will tell you that one of the biggest problems they face is having the cash on hand to take advantage of opportunities to grow and expand their business. As a small business owner you do it all, from taking calls from customers to helping out executing your core business processes when you’ve got a rush order or recovering from some kind of setback. Collecting on your invoices is just one more thing that you have to keep up with. Moreover, customers frequently wait until the last minute to pay, which can leave you strapped for cash at the worst possible time. Many small businesses have found a solution in invoice factoring.
What is Invoice Factoring for Small Businesses?
Invoice factoring is a financial product that many small businesses use to grow their business and to have the cash on hand they need to expand. The process starts when you get factoring approval from an invoice factoring company. You submit an invoice and they’ll pay an initial funding rate, usually 80-95% of the invoice’s value. You get the rest, minus a small discount rate, once the customer pays the invoice.
Benefits of Invoice Factoring for Small Businesses
Small businesses can benefit from invoice factoring services in a number of ways. The first is the fact that invoice factoring gets cash in your hand when you need it. You can use the case to cover payroll, buy new equipment, get new office, production, or storage and warehouse space, hire new employees, or anything else you might need to do. There are no restrictions on what you can use the cash for, which means you’re in complete control of your business.
Additionally, invoice factoring is better than bank loans or lines of credit for many small businesses. If you haven’t been in business long enough to have an established credit history, or have had trouble in the past, then invoice factoring is the answer you’ve been looking for. Factoring companies check the credit of your clients, so it’s one of the best solutions for a small business that needs liquid capital in a hurry.
Finally, most factoring services offer things like collections services and online tracking, which means you can spend less time worrying about administrative and accounting issues and spend more time growing your business.
As you can see, there are many benefits that invoice factoring can afford small businesses. If your small business if facing a cash crunch, try invoice factoring today.