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When to consider invoice factoring

When to Consider Invoice Factoring

When to consider invoice factoring

When to Consider Invoice Factoring

Small business owners have many challenges. One of these challenges is finding the right sources of capital to fund their business. It is crucial when running a business to know where you stand financially at all times. All too often company finances are overlooked until it is too late.  Don’t wait to the last minute to find the right financing tool.

There is an abundance of options for financing a small business, invoice factoring being one that is making a resurgence. Invoice factoring, which helps you manage cash flow, presents an option for financing using the receivable assets of the company, and not incurring debt as in a traditional loan. A consistent cash flow allows your business to run smoothly and continue to grow. Invoice factoring companies can vary dramatically in what they offer, so make sure to know the facts before you commit.

*When looking for a factoring relationship remember the “Who, What and When”. *

Who is the best Invoice factoring company for my business?

 An important thing to look at is the number of years an invoice factoring company has been in business. Factoring companies with more than 10 years in the business generally offer a good program.  Companies with 20 plus years are doing something right and it indicates they likely have a very solid reputation. Look for a factoring company with a tenured management team and sales force, along with great customer service. Get to know the people you will be partnering with to finance your business, because it DOES make a difference.  Relationships are key, especially when dealing with what can be stressful financial matters.

What factoring program is right for my business:

Most invoice factoring companies have similar programs, but it’s how they work with the business owner that matters. Many factoring companies have industry expertise in areas such as trucking, medical and staffing that could be beneficial for the business owner. When selecting an invoice factoring partner focus on companies familiar with what you do.

When should you work with a factoring company:

If slow cash flow is preventing you from meeting business expenses on time and affecting the growth of your company, it may be time to look at invoice factoring. Most companies experience slow paying customers from time-to-time but if it has become the norm, invoice factoring could be the answer. Invoice factoring can be long or short-term. Businesses often become eligible for more traditional business financing; however, many stay with invoice factoring due to the ease of funding and eliminating the need to incur more debt.

Questions to ask when comparing invoice factoring companies:

  1. What type of contract is required?
  2. Do you have a minimum and do I have to factor all of my receivables?
  3. What are your rates?
  4. What do you offer aside from funding?
  5. How quickly will I receive my funds?

Look at their website, and check various sources for referrals and reviews, or just call American Receivable 972.404.4726 americanreceivable.com