6 Ways Businesses Use Invoice Factoring
Is invoice factoring right for your business? You may be surprised at how many companies utilize invoice factoring as part of their financial management and the variety of ways it helps their growth. Most business owners and managers know factoring can give them quick access to cash for their accounts receivable but may not realize all the benefits. Here are six ways invoice factoring is used to improve various types of businesses.
Stabilize Cash Flow
Almost every business can benefit from reliable cash flow. Not knowing when payments will come in can put a strain on your working capital for everyday expenses and growth opportunities. Invoice factoring gives businesses control over their cash flow, stabilizing the stream of cash coming in to match their budget needs.
Negotiate with Suppliers
Access to working capital can help businesses negotiate better pricing or terms with their vendors and suppliers. Many companies use the cash they can receive from invoice factoring to get discounted pricing or terms on their supplies. This can offset the cost of factoring and offer long-term savings for the business.
Invest in Growth
Opportunities to grow your business can occur at any moment but may require action and having access to available funds immediately. Invoice factoring gives companies the chance to access funds for growth opportunities immediately, whether it be supplies or fuel for an unexpected rush order or marketing to a new audience.
Startup Growing Pains
Startup businesses often do not qualify for business loans or lines of credit needed to meet the growing pains of their company. Invoice factoring can be used by new businesses needing funds to overcome hurdles that come with growth, including expanding personnel, meeting payroll needs on time, buying new equipment and covering overhead.
Maintain Good Credit
Undependable cash flow can impact timely payments to suppliers and financial institutions. Many businesses depend on invoice factoring to ensure they can make their payments on time, every time to maintain good credit.
Better Relationships with Clients
Maintaining good client relationships can be difficult when collections are handled in-house. You want to keep your clients happy, but you also want to be firm on collecting accounts receivable. Invoice factoring outsources collecting accounts receivable, allowing businesses to focus solely on servicing their customers. Plus, some companies are able to downsize their accounts receivable personnel to offset factoring costs.
Are you interested in the ways invoice factoring can help your small to mid-size business? Contact our team at JOBE Services Inc. in Humble, TX, to learn how you can receive same day funding when we purchase your invoices.