Cash flow gaps can easily disrupt your daily operations and stall your business growth. Unfortunately, much of this gap is due to delayed payments from customers, which factoring lenders help resolve.
In this post, we’ll discuss what factoring lenders are and how they can help bridge the cash flow gap. Ultimately, we’ll also help you pick the best factor to partner with for your business. Keep reading and see how this financing solution can be a game-changer for your company!
What are factoring lenders?
Factoring lenders, more known as factoring companies, provide a specialized type of invoice financing. Although some people call them ‘lenders’, they don’t actually provide traditional loans.
Instead, they purchase your unpaid invoices for a small fee so you can receive your much-needed working capital fast. At the same time, factors like Factoring Express will take over the collections process, so you no longer have to chase payments from your customers.
With some businesses waiting 30, 60, or even 90 days to get paid, factoring companies are heaven-sent for their cash flow. It allows them to turn outstanding accounts receivables into cash on the same day and free themselves of the collections process.
Very important: factoring is NOT a loan. Instead, it’s a cash advance. It doesn’t incur interest, and you don’t have to wait weeks for approval. This is the same reason why more and more business owners like you are partnering with invoice factoring services lenders.
How invoice factoring lenders can boost your cash flow
Partnering with a Florida factoring company like Factoring Express might be the financial solution your business needs. Here’s how we can improve your cash flow so you won’t have to resort to another bank loan:
1. Providing instant cash to your business
Factors like us inject instant cash into your business, so you’ll have enough money for your day-to-day operations. Instead of being at the mercy of your customers, you will receive fast payments to close the cash flow gap plaguing your business.
At the same time, having enough working capital will allow you to accommodate more customers. In our experience, many small businesses have to turn away new contracts because they are still waiting for payments on their large invoices. But with factoring, they found a way to release the funds tied to their aging ARs without any long-term commitments.
2. Reducing your administrative burden
Invoice factoring company lenders also reduce a business’s administrative work by taking over the collections process. So, instead of sitting in your office for hours calling customers, you can pass that task to us all while enjoying the convenience of instant funding.
For you, this means you or your staff can focus on serving more customers or attending to core business activities. Aside from that, it takes the stress out of managing your finances since we also provide back-office support, including accounting and bookkeeping for certain industries.
If you don’t have a dedicated collections team or you’re struggling to collect payments, you can end the agony by selling your invoice to us. You get quick funding, you transfer the responsibility of collections, and you’ll have more confidence in your finances – sounds like a dream for business owners!
3. Reducing your dependence on credit
Are you still reeling from a huge debt? Or have you been exhausting your credit line to cover daily expenses? These situations could mean your business is barely making ends meet. It will be impossible for you to plan your business growth, and you’ll be trapped in the cycle of borrowing.
The good news? You can turn things around through our factoring services. Instead of using your credit line to cover expenses, you can leverage your unpaid invoices instead. You can sell it to us, and you’ll receive funds on the same day without interest rates or payment terms that will keep you up at night.
This way, you can preserve your borrowing power for bigger business opportunities. Maybe you can use it to procure new equipment, hire more people, or open new locations for your business.
4. Giving you flexible funding
With factoring, you can choose which invoice you want to fund and when you need it. For example, you can factor invoices from slow-paying customers and keep the rest of your ARs within your in-house collections team.
Aside from that, we don’t impose monthly minimums, so you can request funding only when you need it the most. This gives you full control over your factoring spending based on your business needs.
5. Helping you stay ahead of your bills
Due to delayed payments, many businesses end up missing supplier payments, payroll, and rent. All these are the bane of every business’s existence, which can lead to compromised relationships with your suppliers and staff.
So, instead of putting your reputation at the mercy of your customers, you can partner with a factoring company instead. By selling your invoices to us, you’ll have a steady flow of cash to cover your financial obligations.
The best part is that factoring also lets you offer better payment terms to customers. Instead of bugging them to pay fast and upfront, you can come up with a more flexible option that will boost your client relationships.
Signs your business should partner with factoring invoice lenders
If you’re a business owner dealing with cash flow gaps, then it might be time to consider factoring some of your unpaid invoices. Here are some of the situations where our factoring service might be the easy solution you need:
- You don’t have a good credit score. Factoring companies like Factoring Express check your customers’ credit, not yours. What matters to us is your customer’s ability to pay, regardless of your credit standing. This makes it a good financing option for new businesses or those still recovering from bad debt.
- You’re always borrowing money. If you keep borrowing money to pay off another loan, then factoring might be the solution you need. This is the case if your working capital is tied to your unpaid invoices and you don’t have any other option but to resort to short-term loans.
- You’re in an industry notorious for long payment cycles. Many industries, such as healthcare, trucking, contracting, and manufacturing, are known for delayed payments. This is why many businesses in these sectors partner with factoring companies like ours to prevent cash flow gaps.
- You find it hard to secure business loans. Traditional bank loans have rigorous requirements, which some businesses may not qualify for. If you’re in the same situation, then factoring might be an alternative you can explore.
- Your invoices remain unpaid during seasonal fluctuations. During slow months, you can sell your invoices to factors to prevent long cash flow gaps. This way, you don’t have to scrape the bottom of your financial barrel just to keep your business running.
How to choose the best small business invoice factoring lenders
Take note that factoring is only as good as the factoring company you’re going to partner with. And if you’re in the hunt for the best one, make sure you check for the following aspects:
- Industry experience. First, you’d like to partner with a factor that’s been providing funding for a business similar to yours. This way, you’re assured of funding that meets your business needs and the regulatory requirements of your industry.
- Factoring terms. Next, you should know whether they offer recourse or non-recourse terms. With recourse factoring, you’ll have to pay back the factor in case the customer fails to pay the invoice. Meanwhile, non-recourse terms eliminate this liability, but fees and requirements are often more stringent.
- Factoring capacity. You should also inquire about the company’s maximum factoring line. A substantial funding capacity ensures that the factoring company can keep up with your growing business’s financial needs. For example, here at Factoring Express, we have up to $1 million of factoring line for small to medium enterprises.
- Factoring fees. Make sure you also understand the pricing model of the factoring company you’re planning to partner with. It can be a fixed rate or a variable/percentage rate. Both can be cost-efficient, depending on how long it takes your customers to pay.
- Contract duration. If you want the utmost convenience, you should choose factoring companies that don’t impose long-term contracts. This way, you can use their factoring services only when you need it without being forced into a long-term commitment.
Unlock quick business funding with Factoring Express
At Factoring Express, we provide flexible funding without the tedious paperwork, long-term contracts, or long waits. We offer a straightforward process where we can approve your account and fund your invoices on the same day!
So, if you’re tired of chasing client payments and dealing with cash flow gaps, all you have to do is reach out to us today. We work with a variety of industries and businesses, including startups that need invoice funding the most.
If you want to learn more, feel free to contact us today. We’ll also give you a 1-week free trial, so you can see the difference factoring can do without the additional cost!
