Making sure your small business continues to operate smoothly and grow can be challenging. You must achieve the right balance between having plenty of cash on hand and making sure your suppliers and employees are paid, and spending money on equipment advertising to ensure ongoing growth.
Large sales growth and orders can extinguish any cash reserves you have, which can limit your business’s ability to meet payroll or pay your suppliers on time. These types of expenses can seriously impact your growth.
This is where factoring comes in. Some of the top reasons your business should consider factoring can be found here.
Factoring Is Not a Loan
Since factoring is a non-debt instrument, it means your business is not borrowing money when you factor. Instead, you sell an asset, which is your accounts receivables, and contract the collection of these debts to your factoring partner. The factoring company does not require a track record to buy your invoices. This means you don’t have to have an established credit history to benefit from factoring.
Easy Credit Approval
Factoring companies will approve credit based on who you sell to and the strength of your invoices. It does not consider your business credit score. This means that even if you are just starting out, you don’t have to have superior credit to benefit from factoring. As long as your clients have decent credit, the factoring company will work with the business to reduce credit exposure and maximize how probable clients are to repay.
Handle Your Accounts Receivables
Trying to collect on unpaid invoices takes time and resources. These are often tied up in your daily operations. If collection calls aren’t made regularly, invoices may not be paid, which can cause your cash flow to cease.
The factoring company you hire will make the calls and collect your outstanding invoices. This will let you focus on running your business. When you use factoring services, it means your business contracts the service of collections to the factoring company. You also receive the money you are owed right away, rather than having to wait for your client to pay.
While factoring solutions may not be right for all businesses, they offer an array of benefits for some. Be sure to keep this in mind if you want to help improve your company’s financial situation and ensure you have adequate cash on hand at all times for continued operations. To improve your company’s cash flow and grow your capital reserves, contact the team at Hemingway Financial Group today and ask about our factoring services.