Small Business Invoice Factoring
Alternative funding solutions are now available for many small to mid-sized businesses. A process known as accounts receivable factoring was traditionally used by large corporations but in recent years has become widespread among small businesses everywhere. Small business factoring allows you to get the working capital you need to run your business without incurring any debt!. Find out how factoring for small businesses could be just the solution you need to get your business on its feet.
Why do Small Businesses use Factoring?
Many small businesses are dependent on customers paying their bills on time, but not everyone pays in a timely manner. When you need working capital, and it’s not readily available what do you do? If you have ever encountered this problem, then small business factoring might be an option for you.
Business invoice factoring involves selling your accounts receivables (invoices) to a factoring company. Upon the transaction, you will receive an immediate advance (usually within 24 hours), of up to 90% of the face value of the invoice. This is much faster than waiting the standard 30+ days for the customer to pay, and that’s if they even decide to pay. The customer is then notified that all future payments should be rendered to the factoring company. There is no need for you to worry about collections, because once the sale is made, all rights to the invoice has been transferred to the factoring company. Business invoice factoring takes the stress out of dealing with your accounts receivables, allowing you to focus on growing your business.
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Factoring for business is a great way to get fast cash. Whereas a bank loan can take ages days to get approved, business factoring companies offer approval within 3 – 5 days. Banks also require that you have good credit in order to get a loan. Your credit history won’t impact your chances of approval since approval is based on the creditworthiness of your customers. The best part about factoring for small businesses is that you won’t bring any debt upon your business, unlike a traditional bank loan.