Capitalize Your Receivables with Invoice Factoring

Hurry up and wait. Sounds familiar? If you own a business that sells products or services to other companies, you are very familiar with the painful payment cycle that clients can put you through. They demand immediate delivery of the service, but will insist on paying 30 to 60 days after receiving the goods. Waiting up to 8 weeks to get paid can be challenging for many businesses. Who can wait? You have employees, suppliers and rent to pay. But then again, how can you argue with your customers. Especially, if they are large established businesses with strict payment policies. You end up having two options. You can bite your hand and wait. Or you can look for business financing. 

Of course, looking for a business loan is easier said than done. Banks only give business loans to companies that can provide solid financials and a detailed business plan. Fortunately, business loans are not your only option. Recently, an alternative called factoring has been gaining traction.
Invoice factoring is not a loan. Rather, it’s a financial arrangement where a factoring company advances you money on your soon-to-be-paid invoices. Advances average 80%. Once your customer pays for the invoices, you get a second advance for the remaining 20%, less a small fee. Note that the actual terms vary by customer and industry. 
Factoring financing has a number of advantages over conventional financing. First, factoring companies provide funding based on the strength of your invoices, rather than on the strength of your company. This means that new businesses can qualify easily. Second, factoring companies can provide you with financing quickly, usually in a few days. This makes it a great solution for companies that need working capital quickly. 
Although not widely used until recently, factoring invoices has been gaining traction in the last few years. This is particularly true in the transportation industry where freight bill factoring is very common. It is also true in the staffing industry where staffing agency factoring is also widely used. Regardless of your industry, factoring can help you if your business is bound to grow and selling goods/services to commercial or governmental clients.