Small and medium enterprises (SMEs) are the lifeblood of the American economy. Despite their huge contribution, they remain the most vulnerable to delayed payments and cash flow gaps. But thanks to companies like Factoring Express, SMEs now have the option of factoring working capital instead of waiting for customers to pay.
In this post, we’ll discuss how factoring is a game-changer for many business owners in and out of Florida. We’ll highlight the benefits and why it can be the financing solution your business needs right now. Read on and see how factoring helps thousands of business owners nationwide!
What is factoring?
Factoring services are a type of financing in which business owners like you can sell their invoices to a factor, such as Factoring Express. Once we’ve purchased the invoice, we’ll send you a cash advance and take over the collections process.
For you, this translates to instant cash to cover daily expenses and accommodate more customers’ orders. It will also free up your staff from the tedious process of chasing payments.
Once we’ve collected your invoice, we’ll send you the remaining balance minus our small factoring fee. Overall, we can advance up to 97% of your invoice on the same day, so you no longer have to wait for your much-needed working capital.
Still, you should know that there are two types of factoring: recourse and non-recourse. Here’s a quick comparison:
- Recourse factoring. Recourse terms are very common in working capital finance factoring. Under this factoring type, you’ll have to repay the factor or buy back the invoice if your customer fails to pay. The upside is that factors like us perform rigorous credit checks to minimize this risk.
- Non-recourse factoring. With non-recourse factoring, you’re free from the liability of repaying the factor in case your customer doesn’t settle the outstanding invoice. However, this kind of factoring has stricter requirements and higher fees than its recourse counterpart.
The good news is that both these factoring types are available at Factoring Express! If you want to learn which one you qualify for, contact us, and our specialist will give you a free consultation.
How does factoring in working capital work
Factoring in working capital management is a straightforward process. Here’s what you can expect if you decide to try this type of financing for your business:
Step 1. You issue an invoice.
First, you must fulfill your orders and issue invoices to your customers. After that, you can apply for our factoring service, and we can approve your account on the same day.
Step 2. You submit it for factoring.
Once you have all the documentary requirements, you can start sending invoices that you want to factor. You’re free to choose which accounts receivable you want to fund through factoring and when you want to do so.
Step 3. We verify your invoice.
Next, we will verify the authenticity and validity of your invoice. At the same time, we will also conduct a free credit check on your customer to assess their payment capabilities. This will reduce your risk of default under recourse terms.
Step 4. You receive instant funding
Once we successfully verify your invoice, we will send you a cash advance of up to 97% of your invoice value. We can fund most invoices within 24 hours so that you can release the amount tied to your ARs instantly.
Take note that we will also send a Notice of Assignment to your customer together with a new invoice under our factoring company.
Step 5. We collect from your customer
After that, we will start collecting your factored invoice. At Factoring Express, our professional team handles the collections process, so you don’t have to.
Rest assured that we practice ethical collection processes to protect your customer relationships. We’ll also exhaust all possible means to collect the invoice, so you won’t have to worry about potential recourse.
Step 6. You receive the remaining balance.
Once we’ve successfully collected your invoice, we will send you the remaining balance. We will also deduct our factoring fee, which can be as low as 1.99%, so it remains affordable even for small and mid-sized enterprises like yours.
Benefits of factoring working capital needs of SMEs
There are good reasons why more and more SMEs are partnering with factoring companies. They now enjoy these benefits that you can also bring to your growing business:
1. You can offer extended payment terms to clients.
Since you’ll receive the funds instantly, you no longer have to pressure clients to pay you quickly. Instead, you can offer them more flexible payment terms, which will allow them to settle the invoice without having to exhaust their own working capital.
In the long run, this will help you build better relationships with your customers. They will also have more confidence in placing bigger orders in the future, knowing that you offer better payment terms.
2. You’ll have enough capital to accommodate more orders.
The best thing about factoring in working capital needs is it will give you enough resources to accept more customers. So, instead of turning away customers due to lack of capital, you can say ‘yes’ to more and bigger contracts in the future.
This means you can make more money without waiting for customer payments. Over time, this will grow and expand your small business.
3. You don’t have to rely on business loans to cover daily costs.
Many SMEs end up trapped in a cycle of bad debts due to delayed payments. They are forced to open another loan to cover day-to-day expenses, which leaves them no chance to utilize it for better opportunities.
This is one thing that factors like Factoring Express help solve. Instead of applying for another bank loan, you can sell your outstanding invoices to us for instant funding. There are no interest rates or excessive paperwork needed.
4. You’ll have more confidence in planning your business growth.
In the past years, we’ve worked with many SMEs who were at the mercy of their customers’ payment capacity. Many of them delay purchasing new equipment or hiring more staff for fear of not being able to meet the financial obligations it comes with.
However, upon integrating factoring into their cash flow strategy, they became more confident in planning their business growth. They were able to expand their operations knowing that they had a reliable source of instant funding.
And guess what? Your business can enjoy this convenience, too! You can reach out to us, and let’s talk about how factoring services can make it happen for your small or mid-sized business.
5. You can free up your team from administrative tasks.
SME owners have to wear different hats to keep their businesses afloat. From operations manager to one-man collections team, they tend to spread themselves too thin. Often, they have to spend hours chasing after payments and making follow-up calls to customers.
Instead of dealing with this administrative burden, you can let a factoring company help. When you sell your outstanding invoices, you’re also transferring the task of collecting the invoice. This is a huge relief, especially if your staff is juggling many things at once in your business.
Does your business need working capital through factoring?
Now, here’s the biggest question: does your business need factoring services? Here are the tell-tale signs that it’s time to partner with a Florida factoring company like Factoring Express:
- You’re getting frustrated over the long time your customers take to pay their invoices.
- You’re losing sleep worrying about how to cover daily costs due to delayed payments.
- You have to turn away growth opportunities because your working capital is still tied to your unpaid invoices.
- Your pending accounts receivables are getting overwhelming, and collecting them has started to feel like a full-time job.
- You tend to hit a slump due to seasonal demand, while some invoices remain unpaid.
- It’s been years, and your SMEs haven’t grown much due to the slow movement of your working capital.
- You don’t have an in-house sales team, or your staff doesn’t have enough time to collect your unpaid invoices.
- You tend to have huge invoices, which customers find difficult to pay in one go.
- You’re starting to miss payroll and supplier payments, which will strain your business further.
Partner with Factoring Express to unlock your working capital fast!
If you’re struggling with the cash flow problems we listed above, then it’s time to talk with Factoring Express! We offer comprehensive factoring services that will turn your unpaid invoices into cash on the same day.
With our help, you no longer have to wait for weeks to get your much-needed working capital. In fact, you can start getting funds on the same day you sign up for an account with us.
Above all, we don’t impose long-term contracts or monthly minimums. Depending on your needs, you’re free to choose which invoice to factor and when.
If you want to learn more or you’re ready to get started, you can contact us at Factoring Express today! We’ll give you a 1-week free trial so you can see the benefits of factoring for no additional cost!
