Bay View Funding Blog

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.

Cash flow is a perennial problem for many business owners especially those who provide services over products. The reason is simple: payment for services is usually made towards the end of the contract term and rarely up-front. Even payment for physical products is rarely done at the time of sale these days.

Building business credit is tough. You have bills to pay and your suppliers, laborers, employees, or creditors don't care about the mountains you have to move in order to keep everyone paid. Traditional banks want you to have a longer track record of success, your D-U-N-S number gets you small revolving credit accounts, but no cash flow capability, and investors want a voting share in your company if they're going to inject cash. Fortunately, invoice factoring companies understand the predicament and they have a solution.

The economy is showing signs of improvement. Your business is growing. Happy customers send more customers to your door. Business can boom with more infrastructure. You want to stay competitive and flexible in the marketplace. Those happy customers will pay you. But that may take 30, 60, or up to 90 days. Yes, the money will come in…but you could sure use it NOW. Your employees deserve to be paid on time…and so do you!

It can be frustrating when your business is technically making a profit, but you still aren't able to pay your bills. Cash flow is a problem that affects developing businesses of all sizes. There are a few options open to a company faced with a shortage of cash. Typically, when cash flow slows, businesses turn to banks and finance companies. Unfortunately, using credit to run your business is risky. It is not a long-term solution.

Luckily, there is a simple solution to this problem: invoice factoring.

Staffing agencies count on a reliable, steady cash flow. In business, solid fiscal health relies upon how quickly a customer pays for services rendered. When you’re billing multiple invoices at once, it’s easy to see how profitable the business should be.

But when your accounts receivable is waiting…and waiting…on payments, your cash flow comes to halt.Theoretically, your company should be making money. Realistically, it can’t. Not unless clients actually pay their invoices.

That’s where invoice factoring comes into play.