Offering Net 30 Terms Using Invoice Financing

Offering 30 day payment terms, or net 30 as it's called, is a requirement for companies that sell goods and services to larger companies or the government. As a matter of fact, thanks to the recession, most companies are paying their invoices in 45 or as many as 60 days. Larger companies do this because it's a source of cheap financing for them. They get use of your services and products for up to 60 days before having to pay for them.

While this arrangement is good for the larger businesses making a purchase , many small and medium sized vendors can't afford to wait 60 days to get paid. They have their own expenses to deal with - salaries, rent and vendors. Due to this, growth will be limited to the amount of available capital. Vendors will sign on new clients until they reach the point where they can no longer afford to offer terms - and then stop growing.

One way to extend your capabilities and support growth is to get business financing. Some financial products address this problem better than others. Small business loans, for example, can be used to cover operating expenses but are not ideal as they are usually better suited for buying assets or making certain types of investments. Lines of credit offer more flexibility than a business loan in this case, but like most business loans have bank imposed maximums or limits.
Usually, a better solution is to use invoice financing. As its name implies, this solution provides you with financing based on your invoices. The financing company advances you funds against your invoices, enabling you to cover operating expenses.

By financing your invoices you can offer net 30 to net 60 terms without having to worry about waiting for payment. This provides you an important competitive benefit while improving the financial stability of your business. Invoice financing is a flexible solution as it dynamically adapts to the changes in your accounts receivable. This enables you to focus on the most important task of all - growing your company.

One of the most important features of invoice financing is that it's easier to obtain than other forms of financing. All you need is a business that is free of liens/judgments and has a solid roster of clients who pay their invoices in 30 to 60 days.