Do you struggle from month to month, waiting for a client to pay you? Can a single customer with a large, overdue invoice really gum up your bank account until their check clears? Have you missed out on opportunities that required fast cash simply because you didn’t have enough of a buffer to cover the cost? Have you wanted to expand your company, but you can’t get enough of a loan secured to make it happen without putting your day-to-day operations in financial jeopardy? Are your customers mostly reliable, paying within the agreed-upon terms—usually 30 to 60 days at best? If you have answered “yes” to any of these questions, you owe it to yourself to look into what is called factoring receivables. It is better than a loan, because you aren’t actually creating any debt for yourself.
Factoring receivables—also known as accounts receivable financing—is one of the single best ways for companies to increase their liquidity with short notice. In essence, when you partner with a factoring receivables financing company, you can tap into the value of your unpaid receivables before the customer actually pays for them. The two of you will come to a decision on how much the receivables are worth; in most cases, a percentage fee will be assigned to every invoice. This is how the financing company makes its money.
Rather than waiting around to get approved for a loan from the bank, which can take weeks, most financing companies can issue payment for your unpaid receivables within hours or days. Imagine what you could accomplish if you suddenly had immediate access to the value of all your unpaid receivables. You can clean up your own debts, which can improve your credit rating and could also get you more favorable payment terms with your vendors. You could upgrade your equipment or gear to make it more competitive. You can get that cushion back in your bank account to cover any unforeseen problems that might come your way in the future. Or, you can start looking at growing your business.
One of the best parts of factoring receivables is the peace of mind that comes with knowing you no longer have to stress out playing the waiting game with your unpaid invoices. If your customer is a month late paying you for a big order, it no longer directly affects you—you’ve already received your money from the financing company. It is now their responsibility to absorb the problems that come with slow payers. Meanwhile, you can focus on more important things—like managing your company.
Read More on Factoring your Receivables with Durham.