Bay View Funding Blog

Like many financial services, invoice factoring works best when used as part of an overall financial management strategy. When used appropriately, it may help jumpstart growth, pay down debt, and help businesses find a path to financial success. We’re here to help you understand exactly what invoice factoring is and when you should consider using it for your business.

Almost a decade after the 2008 stock market crash, some lending institutions are still conservative with lending. Maintaining any size business requires a steady cash flow and many small to large-sized businesses have tight budgets. For many businesses struggling to make ends meet, the barrier may not be a lack of motivation – it could be a lack of capital.

According to Google Trends (see graph below), one of the hot trends in American business today is invoice factoring.

You see it online; even hear about it on television and the radio. But would it surprise you to learn that this way of creating cash flow for your business isn’t new? In fact, invoice factoring is over 2,000 years old!

Selecting the right factoring company for your business can seem overwhelming, but it doesn’t need to be that way. In fact, the process is quite simple.

When we were young, wise adults taught us (if we were lucky) about “wants” and “needs” when choosing how to handle our money. “Needs,” we learned, took priority over “wants.”

Invoice factoring benefits medium and large businesses by reducing cash flow crunches and allowing for possible business expansion. One of the most important systems in any business is financing. There are several options for financing which include traditional cash advance options, such as loans, and alternative routes, such as invoice factoring. However, the use of traditional finance or cash advance systems may have challenges. For example, there may be restrictive guidelines that traditional lending entails. The time required to process, mail, and receive invoice payments may negatively affect both a business’ operational efficiency as well as the optimal use of resources.

Like many businesses juggling multiple 30 or 60 day outstanding invoices, you may find your business financially strained, especially when some customers wait up to 90 days to reconcile their bills. This may leave your business with limited working capital to cover administrative overhead, reduce existing debt, or even cover normal payroll costs. This is a situation that may be helped through invoice factoring or invoice discounting.

As a business owner, you want to take the next step and grow your company. For many small and mid-sized businesses, that means working on getting lucrative government contracts. Even if you’re lucky enough to get the work, actually doing it can be a real challenge, especially when it comes to things like invoicing and billing.