Why should manufacturing companies use invoice factoring?
Invoice factoring will help you accelerate your cash cycle, quickly replacing your near-current assets — or invoices — with cash. Liquid Capital purchases your invoices, providing funding and allowing business owners to outsource invoice management by collecting the money owed to you by your customers.
This will allow your company to avoid costly interruptions to your manufacturing cycle, by providing you with the working capital to replenish the inventory or components you need to make further sales — and take advantage of additional opportunities to grow your business.
By advancing the cash to cover the cost of goods sold and your expenses — including payroll — the invoice factoring process will enable you to reload early and generate more business.
Having extra working capital available may also help you qualify for discounts from your suppliers by allowing you to purchase supplies in bulk. You may be able to take advantage of early payment discounts by settling your outstanding accounts payables ahead of their due date.
When these kinds of discounts are taken into account, you may find they are equal to or greater than the cost of factoring.
Unlike traditional financing options, the invoice factoring process doesn’t require the same types of documentation, nor does it require a minimum time that your company has been in business. This is great for new and growing businesses, as well as established companies that need an alternative funding solution.
Invoice factoring may also allow you to maintain the control you want in your business — since you may no longer need to search for investment dollars as you grow, including bringing on additional shareholders or selling equity in your company.