How Increased Working Capital with A/R Factoring Helps Businesses Thrive
Working Capital from Invoice Factoring
In a world where small businesses and startups are in need of financial assistance and improvement in working capital yet continuously find themselves not knowing where to look, one financial tool stands apart from the rest: invoice factoring.
Invoice factoring is a solution to gaps in cash flow unlike any other. With accessible requirements for approval, immediate funding, and affordable low rates, more and more businesses are discovering the financial benefits of choosing to factor invoices. When creating critical working capital by selling your unpaid invoices to an invoice factoring company like Bankers Factoring, true financial health and security are never far out of reach.
Read our comprehensive guide to factoring invoices and learn more about selling your invoices to Bankers Factoring.
How Does Invoice Factoring Work?
Once your business has successfully completed a transaction and satisfied your customer, you are often left with an invoice on 30, 60, or even 90 day payment terms. Slow payment and the problems it creates may seem like something you can’t do anything about. However, this is not the case. You can now turn slow payment around by selling your unpaid invoices to an invoice factoring company.
After our quick and simple approval process requiring little documentation and based on your customer’s credit instead of yours, we will provide you with an immediate cash advance of 80-93%. You are now free to use this cash advance wherever you see fit. There are zero restrictions on where it can be used.
We will now collect the payment from your customers ourselves. We take the burden off your hands and treating your client with only the utmost professionalism and respect. Once we have received the payment, we will forward you the rest of the reserves minus an affordable factoring rate. Our rate is cheaper than swiping most business credit cards. This process can be completed as many times as you need. And there is no limit on how many invoices you can factor.
Now that you have successfully factored your invoices, you are able to enjoy the full benefits of having access to strong, active working capital. We will now explore the details of these helpful benefits.
Got more questions about invoice factoring? Have them answered with our invoice factoring FAQ.
What are the Benefits of Improved Working Capital with A/R Factoring?
Increase in liquidity and flexibility
Gaps in cash flow create a lack of liquidity and flexibility. By factoring your invoices and bridging these gaps in cash flow, you are able to confidently strengthen your company’s liquidity. With this strong liquidity, you are now financially enabled to cover any short-term liabilities. Payroll, bills, and taxes can now be handled with ease.
When you are able to cover your essential expenses with ease, your financial flexibility is also improved. Instead of worrying about whether you’ll be able to make the most essential expenses, you are free to use your quick injection of working capital towards new opportunities for growth and expansion. When unexpected yet welcome opportunities arise, you will no longer have to pass them by.
Learn how Bankers Factoring combines PO financing and invoice factoring and the benefits of combining both financial tools.
Reducing debt and interest cost
Many traditional financing options, such as bank loans, involve the risk of debt and paying high interest rates. However, with invoice factoring, there is absolutely no risk of debt involved, as there is no money borrowed. Invoice factoring is also an especially inexpensive financing option, and especially so with Bankers Factoring. We offer a low, affordable invoice factoring rate with transparent terms and zero hidden fees.
Bankers Factoring also offers something that many other factoring companies do: bad debt protection from non-recourse factoring. Non-recourse factoring means that if your customer fails to make their payment thanks to bankruptcy or insolvency, we will absorb this loss for you, protecting your company from the threat of non-payment and providing true security and peace of mind.
Learn more about the benefits that bad debt protection provides.
Strengthening client relationships
Some business owners may worry about what their customers will think about invoice factoring or worry that the factoring company collecting the payment from the customers could result in abrasive interactions and potentially damaging client relationships. However, this is not the case.
Invoice factoring is a well-established, respected, legitimate financial tool, and many of your customers will have already heard of and dealt with it before. If they haven’t heard or worked with it before and want to know more about what it means, this is no worry either. You can learn how to easily navigate this with our article on how to talk to your customers about factoring.
When collecting payment from your customers, we will always use our famous Bankers’ light touch, meaning we will treat your customers with the utmost professionalism and respect. As owner-employees ourselves, we intimately understand the importance of strong client relationships. We are not the same as a collection agency: we will never harass your customers, and working with us will only serve to strengthen your client relationships and reputation.
Know the difference between collection agencies and factoring companies.
With the increased cash flow and active working capital you receive from invoice factoring, you will also be able to provide even better services to your already loyal customers.
Managing seasonal or unexpected cash flow fluctuations
Fluctuations, whether seasonal or unexpected, can be difficult. Approaching your off-season and wondering how you will make ends meet is a problem known to many business owners. Unexpected fluctuations can prove to be even more stressful when you cannot predict these dips in income.
Invoice factoring helps you be prepared for these fluctuations, whether expected or unexpected. By bridging the gaps between payments and solving the issue of slow payments, your business is able to maintain increased security in your cash flow and be better prepared for times of decreased sales.
Also, know what to do if you can’t make payroll and how accounts receivable factoring can help with cash flow problems.
Critical Working Capital With Bankers Factoring Service
Now that you understand the true benefits and financial security that an invoice factoring line of credit with Bankers Factoring brings you, there is nothing stopping you from beginning your journey to financial health today. Don’t leave your financial health up to chance: contact Bankers Factoring today for unlimited working capital based on your customer’s credit score and not yours.