Some are opposed to factoring due to the cost. Factoring enables companies to take advantage of growth opportunities around them by freeing up these funds.
INVOICE FACTORING DALLAS TX FREE
Many well managed companies exploit factoring to free up funds that are not being utilized in their A/R.
“Only unhealthy companies factor their receivables” Common Misconceptions Regarding Factoring?ġ. Maybe you want to bid on a new contract, but do not have the working capital to meet the demands? Maybe you want to take advantage of discounted rates with suppliers? Whatever the case, it is always adventageous to have the instant ability to turn your receivables into cash. There is an opportunity cost to having your funds tied up in receivables. Slow Paying Customers Are Stunting Your Growth It is always good to have a factoring line in place so that you have the tools to manage your cash flow and make sure you have the cash to meet expenses.ģ. If you find yourself taking on new debt to pay expenses, you may want to consider factoring some of your receivables. Your Business is Acquiring New Debt to Cover Expenses Many companies often build the cost of factoring into the cost of their goods or services.Ģ.
By factoring your receivables, you can extend these terms without burdening your company and stunting your growth. Most clients look for flexible payment terms. Your Customers Demand Credit Terms/Payment Flexibility Extend Your Cliens Payment Terms Without Burdening Your Businessĭoes Factoring Make Sense for Your Business?īelow are some key indicators that are typical of companies who would benefit from invoice factoring:ġ.Your Credit and Collateral is Untouched.Spend Less Time Managing Invoices/Collections.You can reinvest these funds to grow your business and meet expenses. No more waiting for those crushing 30, 60, 90 payment terms. When you factor invoices, you have immediate access to working capital. In other words, Greenback is not reimbursed by you, but rather by your client upon payment of the receivable. Grenenback is less concerned with your credit and balance sheet because we are financing your business through revenue streams and not a “promise” to pay back a loan.
Additionally, with bank financing, you have incurred debt whereas with factoring you receive funds from sale of an asset (i.e cash for your receivables). With bank financing, a bank will lend you money based off of various underwriting standards such as your credit history and balance sheet. A Bank Loan?įactoring is completely different from bank financing. Rather, factoring allows you to be paid upfront for money that you are owed. Factoring is not a bank loan it is not money that you have to pay back. A factoring company is a third party that buys invoices at a discount from a company with an outstanding receivable balance. Factoring is the sale of an asset (cash for receivables). Invoice Factoring, or Accounts Receivable Financing, is a type of financing that provides immediate working capital to companies by financing their outstanding invoices.
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