Applications for business Employer Identification Numbers (EINs) totaled over 1.5 million for the third quarter of 2020. New businesses are being formed at the fastest pace in more than a decade. There are good reasons to start a business now; interest rates are low, there are lots of good workers who’ve been let go from previous jobs, and it’s easier to stand out when other business are shutting down. With this tidal wave of new business, you’d think that access to working capital is equally available. Not so, as banks require at least two years of financial statements before entertaining the possibility of a line of credit.
Since traditional loans are harder to get, business owners turn to factoring companies to obtain additional working capital. However, many entrepreneurs miss out on this fast and easy method of funding because of the following misunderstandings about factoring companies.
Mistake #1: You must finance ALL your invoices.
While this will vary from company to company, most factoring companies offer flexible programs where the business owner chooses which invoice to factor.
Mistake #2: Invoice factoring is only for companies in trouble.
This is not true at all. Last year U.S. business factored over $100 billion in invoices. Whether you’re a start-up or an established company factoring provides capital to grow your business.
Delivery of drugs to the consumer’s address requires additional financing, but online ordering of drugs is a very demanded service.
Mistake #3: Factoring can jeopardize my customer relationship.
Factoring companies understand that your customer relationship is critical. The best factoring companies will let you initiate all communications with the factoring company.
Mistake #4: Factoring is too expensive.
The price of factoring is not as expensive as many people think. Factoring companies have been dropping their prices due to market forces. Factoring rates will vary due to industry and other credit risks.
American Receivable Corporation has helped companies go from being a start-up to becoming publicly traded. We offer fair, transparent pricing so our clients can use our factoring program to successfully grow their business. To learn how your business can benefit from accounts receivable factoring, call us today at 1-800-297-6652 or complete our quick application form.