If you sell products and services to other businesses or government agencies then managing a company's cash flow is one of the toughest jobs for you in a business. Invoices are paid by most commercial and government clients in about 45 days. But you still need to pay regular business costs and salaries. Although established companies may be able to absorb the wait, most new and growing companies can't. The reason is that fact that they don't have the financial resources to do so.
One of the ways you can use is to try and get a quicker payment from your clients. But this is not helpful because it rarely works. It is important for the most companies and government purchasing agents to pay invoices in the usual schedule. They will demand it. But you run the risk of losing the contract as your client may start questioning your company's financial ability to meet its duties.
But there is another way and this is to look for a business loan from your bank. However, banks don't provide business loans to all companies. Only those companies that have solid financials and a significant track record of gainful operations can ask for loan. That's why, the kind of business financing that banks offer is outside the reach of most business owners.
 It seems that there is no choice for you. Luckily, there is an option. Imagine that you had an agreement where your clients would pay you 80% of your invoice upon delivery and the remaining 20% after 45 days. But for most companies there would not be any cash flow problems if they could protect those payment terms. By the way, they would have enough money to cover their businesses costs and tackle new projects. Unluckily, most clients won't offer those terms to you. However, by factoring your invoices, a factoring company can give you alike arrangement. With this you will be able to give your clients 45 days to pay without problems.
With factoring financing you are provided with an easy but valuable proposition. So, you get about 80% of your invoice immediately upon delivery of your services. The remaining 20%, less a small fee, is given to you as soon as your client pays for the invoice. You are provided with this arrangement with expected cash flow. Besides, it enables you to meet ongoing costs and putting you in the path to growth. In addition, as invoice factoring is flexible, it can grow with your company. That fact that financing is tied to your sales means that as your company grows it expands.
It is quicker and easier to get a factoring financing facility than to get a business loan. Moreover, it doesn't take much time. It usually takes about a week to set it up. Doing business with companies (or government agencies) that pay their invoices on time is the biggest requirement to qualify. Factoring is quite reasonable way.
It is possible for most companies that have decent benefit margins and are challenged by slow paying customers to profit from factoring invoices. Such benefits as having a predictable cash flow and being able to meet costs on time, outweigh its cost.
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