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Four Common Misconceptions About Invoice Factoring

The last two years has seen a record number of new businesses start.  This trend is continuing as more people decide that now is the time to pursue their dream of owning their own company.  With this tidal wave of new businesses, you’d think that access to working capital is abundantly available.  Not so, banks still require at least two years of financial records and a strong personal credit score from the business owner before considering making a loan.

New businesses struggle to find additional working capital is real.  Over 80% of new business report difficulty in finding additional financing for their new business and over 20% close their doors because of negative cash flow.  With this great need for financing for start-ups and growing companies more and more alternative lenders are offering their financing options.  Invoice factoring is a well established industry that offers a simple, straight forward program of purchasing a client’s invoices for cash.  Even though factoring companies have been in the marketplace since the Mayflower there are still some misconceptions about factoring.

Misconception #1: You must factor ALL your invoices.

While this will vary among factoring companies, Top Rated Factoring Companies will offer flexible factoring programs. It’s important to work with a factoring company that does not charge an application fee, a documentation fee, origination fee or a monthly minimum fee.  Smart clients factor only the invoices they need to maintain a positive cash flow.

Misconception #2: Invoice factoring is only for companies in trouble.

There are some factoring companies that specialize in bankruptcies and companies in a turnaround situation.  They have the expertise to work with the bankruptcy law.  But most factoring companies are being utilized by growing companies that are on their way to being self-funded, without taking on any debt!

Misconception #3: Factoring can jeopardize my customer relationship.

The best factoring companies understand that your relationship with your customer is crucial.  Best factoring companies will operate in the background letting you communicate directly with your customers.

Misconception #4: Factoring is too expensive.

In today’s competitive marketplace, the best factoring companies are keeping their rates low to attract new clients.  Savvy businesses owners will look at the opportunity costs associated with factoring invoices and take advantage of invoice factoring when the returns of completing the next project exceed the costs.  Many successful companies have spring boarded their way to success with invoice factoring.  Invoice factoring gives the business owner the confidence they need to take on larger projects.

American Receivable is a Top Rated 43 year old factoring company.  Even though we are a tenured company, we are continually refining our flexible factoring program to give you the Best Factoring service at the Best Rates.  Call today to grow your business with American Receivable.

jack@americanreceivable.com                  972-404-4726

brad@americanreceivable.com                 800-297-6652

dakota@americanreceivable.com            512-339-5112

Voted best Invoice Factoring Company for SMBs for 2022 by Business.com

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