It doesn't matter whether you are selling goods or services to commercial customers or to the government, because you are probably used to the idea of having to wait up to 60 days to get your invoices paid. Nevertheless, waiting to get paid can be challenging, especially if you have business costs that can’t wait. In this situation only a factoring company can help you.
What factoring companies can do is to provide you with financing, based on your slow paying invoices. Removing the 60 day payment waiting period they provide you with the necessary liquidity to meet payroll, pay rent and meet business obligations. And here is how factoring works in a nutshell:
1. Your task is to invoice your customers and send a copy of the invoice to the factoring company.
2. The factoring company advances you up to 90% of your invoices.
3. As you get immediate use of the funds, the factoring company waits to be paid.
4. Once the factoring company is paid by the customer, the transaction is settled.
If business owners want to get financing they go to a factoring company. Besides, factoring companies also provide other important services. Factoring companies can also act as your business credit department. Reviewing existing clients and new prospects, advising you of their payment habits are things that factoring companies can do. Moreover, factors can also provide you with important financial reports and financial analysis.
No doubt the most important task of a factoring company is helping you grow your business. You are also given the financing and the pliability to take on new opportunities. They do this by turning your slow paying invoices into cash. Having no arbitrary limits like business loans, factoring lines grow in relation to your sales. Remember, the more you sell, the more financing you get.
You see that factoring companies can be great business partners and help finance your business growth.
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