By uncovering the benefits of invoice factoring, you’ll also learn how it can help grow your access to working capital without going into debt!
Invoice factoring is an alternative form of financing that is available to businesses that may not have an established banking record with a major lender. Banks and traditional lenders often operate on a line-based financing model based on what your business has already done and the assets you currently own. Invoice factoring, on the other hand, is an innovative way for your business to access the funds you have tied up in your accounts receivable.
Here are five major advantages of invoice financing:
1. Shift your cash flow into high gear
Applying for business loans or alternative financing options can take months to get approved. With invoicing factoring, your business can get much quicker access to cash if you have immediate financing needs.
2. Financial flexibility
If your business requires financial flexibility in terms of maintaining cash flow, then invoice factoring would be your best option. This way, invoices don’t have to be paid in full before there is money in the business account.
3. Higher probability of financial approval
When determining the chances of accessing funding – aspects such as your credit score, collateral, and financing history are often considered with traditional financing. However, these are not required for invoice factoring approvals. Your factoring partner is more focused on the payment history of the customer required to pay the invoice. This is important to understand the level of risk that would be taken in invoice factoring.
4. Save time and money – No collateral required
Normally when a business applies for a loan or line of credit, the bank requires the business to have upfront collateral such as equipment, vehicles, buildings, inventory or even intellectual property. However, with invoice factoring, a business doesn’t have to worry about showing that traditional collateral. This can save you enormous amounts of time and paperwork.
5. Improve customer relationships
Collection can be one of those tasks that can be an administrative headache. By having a professional invoice factoring company manage the collections of your accounts receivable, you’ll be unburdened from this time-consuming task. Along with renewed financial flexibility, you’ll be able to focus on the other aspects of your business — including building stronger relationships with your customers.
Next Steps: Benefits of Invoice Factoring
By unlocking the benefits of invoice factoring, you can grow your business even when a traditional loan isn’t an option.
To learn more about invoice factoring, access the complete Invoice Factoring Guidebook here, featuring the top 10 questions to ask your invoice factoring partner before getting started. This guide will help you assess your options to ensure you’re working with a trusted professional who can help when it counts.
At Liquid Capital, we understand what it takes for businesses to succeed at any stage. We’re business people ourselves, and our company is built on a network of locally owned and operated Principal offices. Whenever you’re talking to Liquid Capital, you’re talking directly to your funding source and a fellow business person.
Images via Pexels