Just one substantial payment that was due within seven days and is unlikely to be paid within 60 days can be sufficient for business owners to lose a working balance in their bank account and therefore, their working capital. Factoring finance can be a lifeline when searching for funding for small businesses.
Without Working Capital, A Business Cannot Advance
For any business, cash flow is vital. Having to purchase goods, manufacture, sell and deliver, can be a long process, especially when customers require 30 to 90 days to pay their bill after final delivery.
For small companies, they must usually pay their bills and expenses either with cash or within just a few days of receiving the goods. This is the opposite of larger companies who can use their size and ability to improve their own cash flow by paying bills as late as possible.
Funding for small businesses is difficult to find in most circumstances. This is where factoring companies can be impressive allies to the smaller operations. Once the business has been delivered, the invoice is presented to the factoring company, and they will collect the funds direct from the client.
This enables the factoring company to send the funds from the invoice direct to the small company, less their fees, to boost the cash flow and therefore, the working capital of the small business.
The factoring company will judge the company due to pay the bill on their ability to be able to pay and not the small business that has issued the invoice.
You can choose to factor an occasional invoice or use the facility regularly. With this knowledge, it is easier to decide how to manage your business into the future because you have more control over what will happen and when.
Factoring invoices do not have to be a complicated procedure. By working closely with an efficient and effective factoring company, your working capital can be increased dramatically and change the outlook for your business.
