Cash flow problems plague even the most successful businesses. The lag time between the completion of a project and the point of payment can create cash shortages that hamper your ability to grow your company or capitalize on new opportunities. That’s where invoice factoring comes in.
When you use third-party factors, you sell the right to collect on an invoice to an agent, who then collects from your customer. You receive payment quickly—usually within 24 hours of the request—for your accounts receivable rather than waiting weeks or months for the cash that you need. One of the many benefits to invoice factoring is to help ensure the health of your business during periods of growth.
Many businesses are concerned that being associated with a factoring company will affect their relationships with their clients. Some apprehension is understandable; your company’s customers are also its most valuable assets. However, there are several reasons that your clients will be more apt to view your choice to work with an invoice factoring company as a strength rather than a weakness.
- The strict requirements and challenges of financing through the traditional banking system have made factoring much more common and, therefore, much more widely accepted. Invoice factoring has been around for years, but, in the past, the only companies that were able to qualify were large corporations. Fortunately, that is no longer the case.
- If your clients have experienced accounts professionals, they will most likely have worked with other companies that used factoring. Invoice factoring is becoming much more mainstream, especially in the trucking and staffing industries. The very commonplace practice is unlikely to cause any disturbance at your client’s company, as it is highly probable that they have seen it before.
- A reputable invoice factoring company’s trademark is its ability to communicate effectively and its professionalism; a qualified factor should be able to easily communicate the benefits of financing with an invoice factoring company—should your clients ask—while always maintaining great relationships with your customers. This sort of professionalism only adds to the credibility of working with a factor. Not only do you get the money you need in a timely fashion, but you are also able to preserve your company’s relationships and reputation.
- Business owners wear many hats, and one that takes up a considerable amount of time and energy each week is that of accounts manager. You either spend countless hours on the phone chasing down payments and tracking invoices, or you hire someone to do the job for you. In either case, handling your invoices in-house costs resources that are better devoted to internal growth. Contacting an invoice factoring company eliminates virtually all of the headaches associated with billing. Once the agent purchases the invoice, all of the responsibility for collections transfers to the agent, and out of your hands, thus leaving you with much more free time to focus on what’s most important for you and your company.
- Think of the alternative: if you don’t utilize invoice factoring, you might experience a cash crunch. Struggling to manage your finances reflects negatively on your company. But with factoring, you establish a line of credit and are able to do more than just barely keep your head above water; you could potentially have the ability to expand. Now that looks great to clients—both current and prospective.
Bay View Funding has more than 30 years of experience in invoice factoring. Their expertise has helped hundreds of businesses improve their cash flow, and maintain cash on hand to grow the business. Contact Bay View Funding today at (888) 299-9993 or click here to contact us today.