Benefits Of Factoring

Many businesses are reluctant towards factoring because of the stigma attached by the banking sector for this type of financing.  But what we don’t see is the innumerable benefits of factoring. Let’s understand a few of them below.

  1. Removal of bad debt:  you can totally remove this kind of expense from your income statement.
  2. Improved capital: factoring usually grows with your business sales. So as your sales improve, there will be more cash available at your disposal which will allow you to meet your business goals.
  3. Improved Collection process:  The accounts receivable factoring companies will collect the receivables in a professional manner which will help eliminate the overhead linked to the collection procedure.
  4. Improved cash flow: your business will now have an advantage of early payment discounts and the sheer volume. This kind of cash flow will help you meet your demands at the ground level.
  5. Fast payment of invoices:  with the help of factoring companies you will now be able to get payment for your invoices faster.
  6. Credit screen reports: your factoring company will provide you the credit information about the new customers that you acquire.

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More benefits:

  • The bottom line of any business is money and you need it to keep your business running. Which means you need to pay salaries to your employees, pay up your vendors, clients and yourself. If your business grows you can make more money.
  • Ideally you would want all your customers and clients to pay on time and upfront. But that does not happen in reality. In reality an on time payment is considered which can come even after 30 days of creating an invoice. And in these 30 days you may feel a financial crunch.
  • Accounts receivable factoring companies turn unpaid invoices into cash which will solve the cash flow problems. Such companies can get more than 90% of the outstanding balance. This can be received as quickly as same day. The continuous flow of cash can help companies grow their business rather than waiting for their clients to pay up.
  • Factoring receivable is not a loan which will impact your credit score. This is simply not a loan as there is no collateral involved. This is a source of cash and removes the waiting time of the payment. This process is less stressful and easy to proceed. Grab more knowhow before you get started.