Delayed customer payments can easily impact a business’s operation. From failing to pay suppliers on time or having to pass up on future orders, the cash flow gap will ultimately affect a company’s profit margin and growth. However, with cash flow factoring, this doesn’t have to be the fate of many businesses.
In this post, we’ll discuss how factoring cash flow invoices can be a game-changer for your business. Take note: factoring is a great financial tool, whether you’re a small, medium, or large business owner. So, keep reading and see how this financing solution can positively impact your growth!
Understanding invoice factoring and cash flow
Invoice factoring, sometimes called cash factoring or cash flow factoring, is a financial service that can quickly fund unpaid accounts receivables.
The process is simple: You issue an invoice to your client, sell it to a Florida factoring company, and receive the funds on the same day. After that, factors like Factoring Express will take over the collections so you can focus on maximizing the working capital you recently received.
Once we collect your invoice, we will send you the remaining balance minus our small service fee.
And speaking of fees, here’s the biggest question many of our clients ask: how much will this convenience cost me?
Factoring fees vary depending on the price model of the factoring company. For example, here at Factoring Express, we offer a variable pricing of as low as 1.99% of your invoice value. This is one of the most competitive rates in Florida that even startups can afford.
Overall, your exact rate will depend on the specific terms of your contract. If you want to know your rate for our factoring services, contact us, and our specialist will discuss it with you for free!
Benefits of factoring as a strategy for cash flow management
How does debt factoring improve cash flow, you ask? Here are some of the ways this service can benefit your company’s finances:
1. Steady and predictable cash flow
Businesses of all sizes deal with cash flow problems at some point. While others opt for another business loan or credit line, some choose the wiser alternative of factoring in their unpaid invoices.
Since you get instant money factoring outstanding invoices, you no longer have to wait 30, 60, or even 90 days for customers to pay. You’ll have the confidence that you can receive your working capital on the same day, allowing you to plan for business growth.
You can easily plan the purchase of more equipment, hiring of new staff, and opening of new locations. All of these will boost your profit margins, which is near-impossible if you just rely on traditional, in-house invoice collections.
Unlike traditional loans with long approval periods and tedious paperwork, factoring has a straightforward process. You don’t have to pay any interest or guess when the money will come to your account.
2. Get quick funding regardless of your credit score
Factoring companies like Factoring Express fund your unpaid invoices based on your customer’s creditworthiness, not yours.
So whether you’re still recovering from bad debt or building your new business’s credit score, you can qualify as bigger companies do. The best part is you can choose which invoices you want to fund and when you need it for full flexibility.
Speaking of credit scores, we also conduct a credit check before funding your invoices. This allows you to see your customer’s credit history and assess their non-payment risk. This is crucial, especially if you’re factoring the invoice under recourse terms, where you’ll be financially liable in case the customer fails to pay.
3. No more chasing customer payments
Have you spent hours and days sitting on your desk calling customers about their unpaid invoices? Aside from being frustrating, you’re also wasting precious time that you could use in improving your operations.
This is exactly the problem you can solve when you partner with a factor like Factoring Express. Once you sell your invoices to us, you also transfer the responsibility of collecting the amount. So, while you’re busy accepting more orders, our collections team is the one following up and chasing after your customers to settle the invoice.
Aside from saving time, our factoring services will also free up a lot of your staff’s resources. They can handle more important administrative tasks, and cash flow management will be a breeze.
4. Keep your borrowing capacity and credit lines intact
Whether you’re trying to improve cash flow in trucking, contracting, manufacturing, healthcare, or other industries, factoring might be the solution you need.
When you sell your invoices for a small fee, you get the cash on the same day. This means you’ll have enough funds from your accounts receivable to cover operational costs instead of applying for another loan.
At the same time, you can dedicate your credit lines and borrowing capacity for future business opportunities. For example, you can use your credit lines to fund new equipment or open a new branch.
5. Improve your relationship with suppliers
Many business-supplier relationships go sour due to delayed payments. This will directly impact your operations, especially if a supplier decides not to take your orders anymore. With not enough funds in hand, it will be challenging for you to find another supplier, and it will surely force you to close your shop.
But with the help of a factoring company like Factoring Express, you can prevent this dire situation from happening. By funding your invoices quickly, you’ll have ample cash to pay your suppliers right away.
With your good payment standing, suppliers will also be more willing to accommodate bigger orders in the future, thanks to the trust you’ve built.
6. Enjoy funding without long-term commitments
In some cases, loans and other forms of financing will lock you up on long-term contracts or payment schemes. While this can be beneficial initially, it can also be a problem if your business’s financial status changes in the future.
For example, term loans have collateral requirements, and some businesses tend to overborrow them only to struggle with payments later on.
On the other hand, our factoring services at Factoring Express will not put you at this potential risk. We purchase your invoice without any collaterals, and you won’t be tied to a long-term debt obligation.
Above all, we don’t impose long-term contracts or termination fees. You’re free to decide when to use our service based on your business needs.
7. Offer customers better payment terms
Many business owners we’ve talked to are worried about how their customers will react to learning that a third party will collect their invoices.
But here’s what we always say: factoring is beneficial for both your company and your customers.
Since you’ll receive your funds right away, you can offer customers more flexible payment terms. For example, you can allow customers to pay their invoices in installments, especially high-value ones.
In turn, they will be more confident about placing orders for your business since they won’t have to pay everything upfront. This is a win-win situation in the long run as long as you partner with the right factoring company.
Signs your business needs cash for invoices through factoring
Are you still unsure if factoring is the right financial solution for your business? The following signs might point to yes:
- You have a large number of invoices that remain unpaid for weeks.
- You’re struggling to cover monthly bills on your business due to delayed customer payments.
- You always worry about meeting your payroll obligations and even missing the deadline in some cases.
- You’re forced to downsize your inventory due to a lack of cash to get more supplies.
- You feel frustrated because you’re forced to pass up opportunities due to insufficient funds.
- You’re relying heavily on your lines of credit to keep your business operations afloat.
- You’re spending most of your days following up with clients about their unpaid invoices.
- Your profit margins are slowly shrinking, and you might need to increase prices soon to maintain your level of service.
- You’re worried that if delayed payments become prevalent, you may not be able to keep your doors open.
If you’re struggling with any of these woes, it might be time to talk to an expert like Factoring Express. This way, you can receive instant funding from your unpaid invoices and restore the stability of your cash flow. With enough funds, you can easily plan for new strategies that will bring in more customers and higher profit margins.
Do you want to sell invoices for cash fast? Contact Factoring Express today!
If you’re interested in getting quick invoice funding, contact Factoring Express today! Talk to us, get your factoring rate within minutes, and have your account approved quickly!
When you partner with us, you’ll enjoy full flexibility on invoice factoring. We don’t have long-term contracts, monthly minimums, or hidden fees. You can also choose which invoice to factor and when you need it.
Reach out today and claim your 1-week free factoring trial! Let’s turn your invoices into cash fast so that you can grow your business without worries!
