Late payments create a domino effect on small businesses. They cause cash flow problems, leading to overdue supplier payments, delayed salaries, and other issues that spell financial trouble. Worse, many business owners go out-of-pocket for these expenses, leaving them scraping the bottom of the barrel for funds when new orders arrive. Fortunately, a Florida factoring company offers a quick and easy solution to overcome such customer late payments through instant funding.
In this post, we’ll discuss how invoice factoring works, its benefits, and how you can get started for your own small business. Keep reading and see insights from Factoring Express LLC!
What is invoice factoring?
Invoice factoring is a form of financing where you sell your outstanding invoices to a factoring company for a cash advance. Since you sell your pending invoices, you’re also relinquishing collections to the factor.
Once the factoring company collects payment from your customer, you’ll receive the remaining balance minus a small factoring fee.
Take note that invoice factoring is NOT a type of loan. You get a cash advance against your invoice value without any interest or collateral.
Since it’s not a loan, invoice factoring offers fast funding for customer overdue payments. Here at Factoring Express LLC, you can get account approval and funding on the same day for all eligible invoices.
Imagine you own a metal fabrication business supplying metal components to construction companies. Your client ordered $50,000 worth of fabricated steel, but due to delayed payments, the funds remain tied to your invoice for 30, 60, or even 90 days.
Instead of chasing down payments and waiting in vain, you can simply sell the invoice to a factoring company like Factoring Express LLC. Once approved, we’ll fund up to 98% of your invoice value on the same day.
In short, factoring allows you to receive funds tied up to your unpaid invoices fast, easy, and without long-term obligations. For a small business struggling with delayed customer payments, this means instant cash flow without adding debt to their balance sheet.
How invoice factoring solves customer late payments
Looking for ways to break free from late payments? Here’s how factoring services can make it happen for small businesses, including yours:
1. Instant cash flow without adding debt
During cash crunches, many small businesses take out loans to inject cash into their operations. While business loans aren’t inherently bad, they often come with exhausting paperwork and a long approval process.
With factoring as an alternative, you can leverage your unpaid invoices instead. You can convert those invoices into instant cash on the same day in exchange for a small fee.
In turn, you receive your much-needed working capital without worrying about monthly payments or interests. You’ll have enough funds to take on new orders without struggling to get by with your daily operations.
2. No more chasing payments
Factoring companies have professional collections teams that work with customers to ensure timely payments. For example, at Factoring Express LLC, our team handles communication and payment methods while you focus on making the most of your cash advance.
Instead of sitting at your desk and making endless follow-up phone calls, a factoring company will do it on your behalf. Once you sell them your invoices, you’re also transferring the responsibility to collect, ticking one huge item off your to-do list.
3. Reduced administrative burden
Payment collections and managing aging accounts receivables are a never-ending administrative burden for small businesses. Unlike bigger players, small business owners often have to juggle multiple roles, from overseeing operations to chasing down payments.
This administrative burden can easily drain a small business’s resources and productivity. Errors will start to surface, making payment collections more excruciating and, worse, expensive.
But when you factor invoices, you’re freeing your small business from all these dilemmas. The factoring company deals with the administrative side while you focus on running your business.
Here at Factoring Express LLC, we also offer accounting and bookkeeping assistance to keep tabs on your business’s financial health. We can provide real-time P&L statements, tax preparation support, and more back-office support to make cash flow management a breeze for your biz.
4. Quick funding with a limited credit history
Many small businesses we’ve worked with have limited credit history or are still recovering from a bad debt. Due to this, it’s almost impossible for them to secure bank loans or other forms of financing with strict credit requirements.
The good news? Factoring is focused on your customer’s creditworthiness, not your business. Regardless of your current financial standing, you can be eligible for factoring as long as your customer has a good payment history.
This aspect of factoring will provide small businesses with steady cash flow so they can pay their dues on time. In the long run, this will help businesses struggling with late payments and poor credit build up their creditworthiness.
5. Reduced reliance on traditional loans
Factoring allows businesses to access quick funding while keeping their credit lines intact. It will also reduce their reliance on bank loans – a big help for small businesses with less-than-perfect credit.
Also, factoring offers a quick and straightforward process where you can receive payment as fast as 24 hours. It’s an ideal solution for small businesses in need of immediate funding instead of waiting weeks for loan approvals.
Aside from that, factoring eliminates the stress of monthly payments. Such payments can be challenging to meet, especially for businesses experiencing seasonal fluctuations. Instead, you get a cash advance and pay a one-time fee once the factoring company collects the invoice from your customer.
6. Flexible funding as you need it
You can choose which unpaid invoice to factor in and when—a totally flexible solution when customer payments are delayed.
For example, you can factor invoices from notoriously late-paying customers and keep the rest of your accounts receivables on your in-house collections team. You can also choose to factor your biggest invoices to receive the working capital fast.
Here at Factoring Express LLC, we don’t impose long-term contracts or monthly minimums. You can use our service only when you need to, without any termination fees or penalties. We designed our service for startups and small businesses that deserve fast and hassle-free funding.
7. Better payment terms to customers
Delayed payments often happen when customers don’t have enough funds to pay the invoice upfront. This drags the collection process as customers gather enough cash to pay for everything in one go.
Unfortunately, small businesses can’t usually offer flexible payment terms due to tight cash flow. But with factoring, businesses will receive their working capital right away, allowing them to offer installment payments or other flexible terms.
The result? Improved collection rates and a more confident clientele willing to place bigger orders in the future.
How to implement invoice factoring to your small business
Do you want to enjoy all the benefits of invoice factoring above? Here’s how you can get your small business started with this funding:
Step 1. Find a reputable factoring company
First, look for a trusted factoring company near me, like Factoring Express LLC. We’ve helped hundreds of small businesses in Florida secure fast funding while avoiding bad debts and hefty interest. Our factoring service is tailored to meet the unique needs of businesses across industries.
Step 2. Submit your invoice for factoring
Next, choose and submit the pending invoice you want to factor. With us, you can create an account, get approved, and start factoring invoices on the same day.
Step 3. Factor performs verification
After that, we will verify the authenticity and validity of your invoice to start the factoring process immediately. Upon verification, we’ll process your cash advance. To qualify for factoring, your invoices should be unpledged and have no liens or disputes.
Step 4. Receive an immediate cash advance
Upon verification, you’ll receive a cash advance of up to 97% of your invoice value. We can send your funds via ACH or check so you can access your working capital right away.
Step 5. Factor collects your invoice
Next, we send a Notice of Assignment (NOA) to your customers, informing them of the factoring setup and the new payment options. Our team will exhaust all professional means to collect your invoice on time.
Step 6. Receive the final payments
Once we’ve collected your invoice, we’ll send you the remaining balance with our factoring fee already deducted. Repeat the process and enjoy effortless funding with every new order!
Ready to get started?
Invoice factoring is an easy and quick solution to overcoming customer late payments. For small businesses, it is a game-changing tool that can help them break free from the endless cycle of chasing down payments and relying on traditional loans.
If you’re ready to get started, contact Factoring Express LLC to learn more. Let us discuss how we can convert your invoices into instant cash. Also, claim a 1-week free trial when you apply for our factoring service today!
