Invoice Factoring Guide for Tech Companies

For IT and tech companies that deliver hardware or those called in to build or create databases and software, many have seen an increased demand for their products and services amid the recent digital transformation of the workplace. This affected almost every sector of the economy and may be offering unprecedented opportunities to grow your business.

But if you’re waiting on delayed customer payments to drive the cash flow that will allow you to take the next step of hiring new talent or embrace new opportunities to expand, invoice factoring might be the solution to your short-term working capital needs.

In this guide on invoice factoring for tech companies, you’ll learn:

Challenges facing tech companies

Why should tech companies use invoice factoring?

What can a tech company expect with invoice factoring?

How can a tech company qualify for invoice factoring?

Invoice factoring: helping tech companies reach the next level

Challenges facing tech companies

When disruptions such as supply chain issues for components, staffing shortages or unexpected large orders hit companies in the tech sector, it can have rippling financial implications for the company’s operations.

With the demand for tech services increasing and many business owners planning to double-down on their capital investment in new technology or accelerate their plans to digitize their operations, implementing these changes can be expensive.

Taking advantage of the upward growth trend in the tech industry and hiring the right talent will require working capital – but you or your client may also be trying to fund payroll and equipment costs yourself while waiting for clients to pay invoices at net 30, 45 or even 60 days.

“We help by advancing funds against near-current assets to put cash in the hands of the business owner to take care of their obligations,”

Liquid Capital Principal

invoice factoring for tech companies

Why should tech companies use invoice factoring?

Invoice factoring is a reliable way for technology companies to access working capital quickly. When you factor with Liquid Capital, we purchase your invoices, providing quick funding and allowing business owners to outsource invoice management.

As a business in the IT sector, you may also find it challenging to access traditional financing if you don’t meet traditional lending criteria. The invoice factoring process doesn’t look at how long you’ve been in business or require you to have detailed financial statements or financial projections in place. We base your funding eligibility on your credit-worthy customers, and customer accounts receivables to secure your funding.

What can a tech company expect with invoice factoring?

Invoice factoring is incredibly easy for business owners selling into the IT sector to learn, understand and implement. Here’s how invoice factoring works:

After approval, we will advance your business up to 85% of the value of your invoices.

We will collect payment from your customers and we’ll pay you the remainder of the balance (less applicable fees).

You’ll be able to view invoices in our real-time 24-hour online reporting system, where you’ll have full access to funding status.

Invoice factoring is a flexible solution for companies in the IT sector, as you are also able to decide how long you need to use invoice factoring services. We won’t lock you into a long-term contract — so if you have months where you don’t need to factor your invoices, you are able to opt-out of the process.

how works invoice factoring for tech companies

how can a tech company qualify for invoice factoring

How can a tech company qualify for invoice factoring?

For companies in the IT and tech sector, the invoice factoring approval process starts by contacting your closest Liquid Capital office . At this step Liquid Capital will not perform a credit check or file any registrations.

This is followed by a more detailed application. Liquid Capital’s underwriters will review the financial health and creditworthiness of your customers — including credit reports, references and opportunity analysis.

We’ll ensure that your invoices are completed in full and properly explain services rendered or delivery of product. We will also review invoices so that your terms and conditions contain all relevant information for payment and that you’ve received verbal or written confirmation of approval.

If your business and accounts receivable clients are in good standing, we’ll approve you for factoring and perform ongoing credit monitoring.

Invoice factoring: helping tech companies reach the next level

If cash flow challenges are causing your technology firm to think twice about pursuing opportunities to take on new contracts or hire talented professionals, invoice factoring may be the optimal solution. It provides an infusion of working capital that allows you to position your business for growth when you need it most.

“You want your business to be more than it is today. You’re facing the opportunities in front of you but you may be lacking in the cash or the capital… Let us help you by showing you a light at the end of the tunnel — and the best way to do that is to accelerate that cash cycle by replacing your near-current assets with cash.”

Liquid Capital Principal

There’s a reason we’re North America’s leading invoice factoring provider.

Need more information about invoice factoring?

We’re ready to help you meet any immediate cash flow needs. Get in touch with us to book a free consultation call, and discover if factoring is the right fit. Or visit our Invoice Factoring FAQ page to read the answers to our most frequently questions.