Invoice Factoring for Austin Entrepreneurs

Successful entrepreneurs know that it always pays to have plenty of options. Most importantly options for:

  • Employees
  • Vendors
  • Customers
  • Funding

By having several suppliers an entrepreneur can obtain the best prices for inventory.  A choice of employees means that an entrepreneur can withstand employee turnover.  A steady stream of customers assures strong margins and a chance to explore new markets.  An entrepreneur who has funding options can be certain that the money will be there when it is needed.

The problem with options is finding the ones that will work for your situation.  With vendors, it can be difficult to refuse a vendor offering generous credit terms over a vendor require cash payments upfront.  With funding options, an entrepreneur needs to be certain that they have access to cash and that is what invoice factoring offers.

Invoice Factoring is Perfect for Austin Entrepreneurs

Entrepreneurs face three challenges when it comes to finding the right option to financing their business:

  • Personal credit score.
  • Collateral for secured loans.
  • The need for quick cash.

Entrepreneurs often use their own personal credit to finance their business, damaging their own personal credit score; making it almost impossible to get a bank loan.  Factoring companies focus on the credit strength of the entrepreneur’s customers, not the owners personal credit score.  This allows the factoring company to quickly offer the entrepreneur significantly more funding than a conventional line of credit.

Factoring is Perfect for Startups

When entrepreneurs first get started, there is the promise of success and all the ongoing excitement of a new venture.  But after the first few month of operations, the bank account is now empty, and the entrepreneur is solving their cash flow problem.  At that point it will be almost impossible to find a bank loan, which is why innovative entrepreneurs turn to factoring.

In the first few months of business, the entrepreneur will establish a base of repeat customers.  But the cash generated by these sales is tied up in outstanding invoices.  Even if the invoices are not past due, the entrepreneur is facing payroll and operating costs that must be paid in a timely manner.  By factoring their invoices, the entrepreneur unlocks the cash that is tied up in their outstanding invoices.  As long as the entrepreneur has creditworthy customers, their factoring company will keep the cash coming.  This is true even if the company is a startup.

Austin Entrepreneurs Can Use Factoring to Solve Bad Credit

Another common challenge for startups is establishing a strong business credit rating.  This credit rating will drop with every late payment.  Making it more difficult to get terms from the next supplier. 

But with factoring, the company’s credit score is immaterial.  What matters to the factor are the credit scores of each customer.  Factoring allows the entrepreneur to leverage their accounts receivable aging report to generate cash flow.  When the bank drops out because of a company’s credit score, that is when a factor can jump in and help.

Use Factoring for Payroll Funding

A growing company means a growing payroll.  And even if customers are slow in paying your invoices your employees have to be paid.  By factoring your invoices you are assured that you will have the cash needed for payroll and other operating expenses.

Make Invoice Factoring Part of Your Business Planning

Entrepreneurs start their business with big plans.  When the realities of the marketplace set in, many of those plans seem to be put on hold.  It’s important to explore all your options and have plans in place for different contingencies.  Have a conversation with a factoring company to fully understand how they can keep your cash flowing. 

American Receivable has been a Top-Rated Factoring company for Austin, TX for eleven years in a row.  We have taken entrepreneurs from being a start-up to Wall Street.  Call us today to find out how our factoring program can help you succeed.


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