Fast invoice payment is critical to the success of your business. So how can you get help turning your outstanding invoices into cash? If your cash flow problems are related to slow payment of outstanding accounts receivable, there is an answer that may work for you. Let’s take a look at a few issues your company may be facing when it comes to cash flow:
Has your company experienced any of the following scenarios?
- Your customers are paying invoices 30 - 90 days after they are due
- The bank has said no to your business loan
- Your line of credit is full
- Your cash flow is a constant challenge
- Your recent capital expenditure has restricted your cash flow
- Your business credit score too low to qualify for a traditional business loan
- You need to improve cash flow to enable company growth
- Your company struggles to make payroll
There is a form of commercial financing that may provide the answer to the cash flow challenges mentioned above. It is called invoice factoring. Factoring can allow you to get an advance on your outstanding invoices. The factoring company will pay your invoices in as little as 24 hours. The process enables your business to receive cash more quickly than it would if you had to wait 30 – 90 days for payment. As payment for the service, the factoring company keeps a percentage of the invoice amount as a factoring fee.
So how does it work?
Invoice factoring can really help your business by providing you with access to your cash now, using your outstanding invoices as collateral. Since you are utilizing your own receivables as collateral, factoring will not show up on your balance sheet. The process is simple. The invoice factoring company of your choice will ask you to provide paperwork and it will normally take between 3-5 days to know if you are approved. Once approved, you can submit your unpaid invoices and receive funding in as little as 24 hours.
While invoice factoring may seem to cost more than a traditional loan, it is worth considering your cash flow challenges to decide if the cash flow shortage is costing you more than the potential cost of accounts receivable funding. One of the cash flow consultants at Bay View Funding would be happy to help you evaluate your options and provide your company with a factoring proposal.
Read our informative guide for more detailed information on how to get your invoices paid faster.