Jumpstart Your Company Growth With This 4000-Year-Old Technique
What does a modern business in 2019 have in common with an ancient business in the year 2000 BCE? More than you may expect. For one thing, in 2000 BCE, it was still pretty common for a merchant to sell his goods ahead of payment and to experience a gap in the middle — which is a pretty common challenge today, too.
And with a shared challenge comes an enduring solution: factoring. It enabled merchants to receive partial payment from a third party for their goods in transit (since getting across a country wasn’t quite the cakewalk it is today). The merchant would then be able to continue business operations, and at a later date would receive the final payment. This empowered the merchants to stay open and growing despite challenges associated with delivery.
Today, factoring has grown into a much more effective practice than it was back then, but the principle remains the same.
For more information on how factoring works, see the process here.
Rome may have fallen, but factoring stayed strong.
Invoice factoring has truly stood the test of time since 2000 BCE. So how can it help your modern business operations? In three major ways:
1. When all roads don’t lead to Rome, create your own cash flow predictability:
By eliminating the question of when a client will pay you, you become free to create an accurate budget — and to stick to it. This predictability creates opportunities to ensure all bills are paid on time and to reinvest in future growth.
2. Build your own pyramids with no limits on funding or usage:
Unlike other types of financial tools, there are no restrictions on how factoring funds are used — as long as it is for business needs. Additionally, because of the structure associated with factoring, it’s something that can be used as often as required.
3. Writing the hieroglyphics of creditworthiness:
When you factor invoices, you shift the focus away from your own credit score, and instead onto the score of your customer. So if your company doesn’t have a strong credit history, you can lean on the creditworthiness of an established customer. Factoring can also be helpful in paving the way to make your company bankable by providing you with the time needed to increase your credit score.
Ultimately, for a growing business that has outstanding accounts receivable, factoring can be a funding solution that can cover both expected and unexpected finances.
Taking Factoring from BCE to Today
While it’s fair to say that factoring has evolved since its first utilization 4000 years ago, there are a few common elements that have empowered this longevity. It is important to look for these elements in any potential factoring partner, since they will be regularly interacting with you and your customers — and may ultimately play an important role in the growth of your business.
Start here:
- Expertise: Depth of knowledge and the ability to apply it to your unique case.
- Experience: A strong network and a significant amount of funding deployed.
- Transparency: No hidden fees or complicated provisions.
- Speed: Upon approval, make sure they can deliver in a timely manner.
Accounts receivable factoring can seem shrouded in centuries-old mystery, but it doesn’t have to be complicated. A trusted partner can walk you through the process and ensure that your funding experience will be effective and positive.
If you are interested in learning more about how this financial solution can help your business, be sure to download our eBook: The Invoice Factoring GuideBook.
