Medal-winning ways to leverage invoice factoring
Some business hurdles are easier to overcome than others, but cash flow related obstacles are sometimes the most difficult to clear. Avoid a false start and reach the finish line with invoice factoring.
Surviving the past year has been like winning an Olympic gold medal for most business owners. Even under normal circumstances, running a company is like running a marathon, but it takes another level of determination, grit, perseverance, and nerves of steel during an international health crisis.
Beyond those herculean entrepreneurial qualities, you need to have the cash flow to support your operations and growth plans to reach your business finish line. And since 82% of new businesses will fail because of cash flow, it’s the biggest hurdle.
Luckily, there are creative ways to leap over capital problems with more confidence. Invoice factoring is one of our go-to solutions since it allows you to sell your unpaid invoices and get cash upfront for whatever you need it for. We collect the invoice payment directly from your customer, and we work by your side to strengthen your cash flow planning. This tried and tested financing method can help you remove hurdles altogether.
Here are other ways that invoice factoring can take your business to the top of the podium:
1. Get a great coach.
Being an entrepreneur requires passion, sacrifice and exceptional focus on any given day. But entrepreneurs, just like athletes, need someone to guide them and encourage them to push through the setbacks to come out stronger and better at their business.
With invoice factoring, we partner with businesses and act as that coach and mentor role with many of our clients. We get to know your business, your personal goals, your strengths and weaknesses. And when we assess your business as part of the funding process, we make it a priority to help you develop a plan — like an Olympic training plan — so you know the hard work you’ll be putting into your business will pay off in spades.
Whether you work with us or any other lending company, you need to find that trusted ‘coach.’
2. Be quick out of the blocks.
When your business operations are flat, it’s time to make a bold move and act swiftly. The faster you can get sprinting, the further you’ll be ahead of any cash flow problem. But finding ways to achieve rapid growth at scale is another challenge. And if your growth is exponential, you may also see an equal increase in expenses — creating a need for more cash — fast.
By qualifying and finding the right invoice partner before a cash flow problem exists, you can start to rely on this method to access more cash when you need it — no more searching for capital in a crisis while your competitors are lapping you. Instead, you’ll now be the first to react out of the blocks.
Success Story: Here’s how one small business owner was able to embrace innovation to outlast the effects of the pandemic.
3. Create your own track record.
There’s an old saying that banks will only give you loans when you don’t need them. Factoring, thankfully, is impervious to old sayings and archaic banking restrictions. Where a bank won’t provide a loan to a small or mid-sized business for any number of reasons, factoring has a different structure and set of regulations, making it much easier to apply to businesses of all sizes.
Read: To get more on the specifics of invoice factoring, see how it works here.
4. What if it turns into a marathon?
Depending on your industry, you may have to wait 30, 60 or 90 days from the date of the invoice to receive payment. While this may be okay for the more established players, for a newer business or one under a cash crunch, waiting 90 days on an invoice (especially a large one) can be extremely difficult or even damaging. And offering early payment discounts can often cost more than leveraging invoice factoring.
5. A dropped baton doesn’t have to mean it’s over.
Nobody likes late payments, but every business has experienced the pain of waiting on accounts receivable. And no matter the size of the business, late payments can have far-reaching consequences. Factoring eliminates this problem and often shifts the responsibility of collections from you to the factor.
6. Sometimes it’s a sprint to the finish.
Stocking up your inventory often requires paying suppliers on the spot. It’s imperative to have cash upfront to keep inventory at the right level to meet demand. The flexibility offered by factoring means you can have the right working capital to keep inventory levels on target, avoiding supply issues before they happen.
Ask these questions to get on the inside track
If factoring could be the solution to your cash challenges, it’s crucial to find the right partner who understands your industry, the specific challenges you’re up against and can offer the best funding solution to advance your business.
But before signing an agreement, there are 10 important questions to ask any invoice factoring partner. The answers will help you quickly narrow down the pool of candidates and find the perfect match.