Don’t wait 30 to 90 Days for Invoices to Pay.
How Invoice Factoring Works.
Cash flow is one of your biggest challenges if you are a small business owner. 1 out of 10 businesses is trapped by high-interest Merchant Cash Advances (MCAs), causing major cash flow struggles (Newswire).
Many things can throw off your cash flow and leave you with too little money at the wrong time; for example, if you run an online business, it is hard to know exactly when your customers will pay by credit card or check. Inevitably, some will take their time making payments or even stop spending altogether. This can be very stressful for any business owner—but luckily, there is a solution: invoice factoring.
Invoice factoring allows you to receive immediate payment upon delivery of goods or services instead of waiting 30 days or more for payment from customers who may never pay what they owe in full.
So why use Invoice Factoring:
- The ability to finance invoices before extended payment terms.
- No upfront fees or cash down to receive cash flow financing.
- Better cash flow management by ensuring you have enough money in your bank account each month to cover all expenses and payments.
- Consistent payroll funding to cover weekly and bi-weekly staffing expenses with same-day funding.
- Offer better payments terms your business can afford by factoring invoices
Complete an encrypted application to begin the financing process today. Within 3 to 5 days, receive up to 93% of your unpaid invoices direct deposited into your business checking account!
What is the purpose of invoice factoring?
Some of the most common reasons to factor invoices include the following:
- To have more cash on hand. Any business owner knows that even a tiny amount of money can make a big difference in the success of their business. Cash flow is one of the biggest challenges businesses face. Many companies need more money to pay bills on time and continue operations smoothly.
- To manage slow-paying customers. Suppose your customers are taking longer than expected to pay their invoices. In that case, factoring invoices can help you get paid sooner to avoid waiting for money that may not come in. This is especially true if they have multiple outstanding balances with you!
- To maintain a steady cash flow while waiting for receivables to come in. When business owners do not have enough money coming into their accounts from sales or credit card transactions, there is usually very little room left to pay other bills, such as rent or payroll expenses—especially if those are due by the end of each month!
Related article: Why do Companies use A/R Factoring?
6 Reasons to Use Bankers Factoring
1. To have more cash on hand.
Cash flow is essential, and Factoring can help you manage inflows and outflows effectively. When you sell a product or service, you must wait until all the money comes in before you can pay your bills. With invoice factoring, you obtain payment for the invoice before it is due, so these funds increase your cash flow.
2. To manage slow-paying customers.
Factoring can help you manage slow-paying customers by providing funds to keep your business operating. For example, if you are waiting for a customer to pay their invoice, you might need some extra cash until they do. Factoring offers a way to get that money sooner than later so that it does not hold up payments from other clients.
3. To maintain a steady cash flow while waiting for receivables to come in.
Another great reason to use invoice factoring is to maintain a steady cash flow rather than waiting for receivables. If you need help balancing your inflows and outflows, factoring is the cash flow solution to sustain operations without interruption.
4. To cover payroll and other operating expenses that must be paid on time.
Payroll is a significant expense for most businesses, and it is one of the most significant expenses that can cause cash flow problems. If you do not have enough money to pay your employees on time or at all, they will be upset and may even quit.
The consistent cash flow from selling your invoices to Bankers Factoring helps make weekly or bi-weekly payroll.
Related article: A Guide to Payroll Financing
5. Avoid exhausting existing lines of credit or taking out additional loans, which can be expensive and time-consuming.
- Factoring is faster than getting a loan. Many businesses using invoice factoring say it is the quickest way to earn money in their bank accounts!
- Factoring can be cheaper than taking out a loan. Depending on the interest rates, the factoring rate can be less than your debt service, which leaves more money for your business and its growth.
- It will not affect your credit rating like taking out an expensive secured or unsecured business line of credit or loan would do. This makes factoring ideal for those with poor credit ratings who need money fast!
- You can use invoice factoring to pay off your taxes, insurance, and overdraft fees on current accounts at banks.
Related article: A Guide to Acquiring a Business Line of Credit with Bad Credit
6. Having money available when needed is essential for small businesses. Factoring helps small companies keep regular operations going smoothly without being bogged down by cash issues.
Invoice factoring is a way to get cash when needed and cannot wait. It allows businesses that have already made sales but not received payment to get paid immediately—no waiting around for customers to pay up.
In other words, invoice factoring can help small businesses avoid some of their operations’ most significant pain points.
Related article: The Pros and Cons of Invoice Factoring
How do factoring services work?
Factoring unpaid A/R is when you sell invoices to bypass the payment terms you provide to customers. Bankers Factoring buys creditworthy unpaid invoices and cash advances up to 93% of your A/R value the same day you as funding approval. Once your customers pay their invoices in full, we release the remaining balance, less our small factoring fee (discount or rebate).
Related article: What are Invoice Factoring Services?
What is the cost of using invoice factoring?
The factoring rate, called the discount or rebate, is the percentage taken off your receivables for Bankers Factoring. The discount rate or fee is the cost of Bankers Factoring advancing your funds for no money upfront, just your A/R as collateral.
Factoring rates start between .9% to 1.6% and depend on a couple of critical factors:
- Your customer creditworthiness and ability to pay their invoices.
- The risk associated with your business and industry as a whole.
- Your FICO credit score is in the 525-690 range.
Related article: What does Invoice Factoring Cost?
Why Use Bankers Factoring?
If you want to grow your business, cover payroll funding, and improve cash flow, Bankers Factoring Non-Recourse Services are your answer. The help you need to fund your business is easy when selling unpaid invoices to Bankers Factoring.
Our exclusive non-recourse services protect your business from unpaid A/R from bankruptcy or protracted short pay (bad debt protection). Instead of dealing with long funding processes or monthly repayments, invoice factoring requires no cash down, only unpaid invoices.