Small to medium-sized business owners often face cashflow concerns when payables are due. Avoiding late payments, surcharges, interest and maintaining strong business relationships is critical to business growth. However, as an owner, your customers may not have the same attitude toward paying on time. Late paying receivables impact your ability to meet your obligations, and you may be left with no choice but to dip into a line of credit to cover monies owed. Although your supplier and other business relationships will be spared, you will still pay interest and other bank charges. Instead of financing your cashflow concerns, you can use factoring instead.
How Can Factoring Help?
Factoring is when a company buys your invoices from you at a discounted rate and then takes on the responsibility of collecting your receivables themselves. You receive cash in hand, and you do not have to rely on dipping into your lines of credit to make good on your own payables. The money is available to you as soon as the receivable invoices are purchased.
Using factoring avoids the money lost to the bank on interest and charges, and it eliminates the worry of paying the line of credit back, especially if your line of credit is tied to the equity of your business. Small and medium-sized business owners want to avoid the revolving door of self-financing daily business activities, saving that money for when growth or income-generating opportunities present themselves.
Factoring Is Not an Emergency Service or Loan
While factoring can help your business out during precarious financial times, partnering with a reputable factoring company can be part of a smart receivables practice. It is not a loan and you do not have to repay any money to the factoring company. It ensures you have available cash and can meet your obligations without worrying about late receivables. You can steer clear of self-financed debt and keep your lines of credit open and ready for what they were intended to accomplish.
Factoring is a real financial tool used by businesses across Texas. There is no harm done to your business, since there is no credit check required. In fact, the opposite is true—factoring can help your business credit by allowing you to settle your payables on time.
If you are ready to streamline your cash flow and eliminate the line of credit cycle to meet your obligations, contact JOBE Services Inc. in Humble, TX today.