As a business owner, you know exactly how crucial it is to maintain a perfectly balanced cash flow where the money you let out is offset but the money that goes into your business. You need to also have enough working capital to ensure that your business operations aren’t interrupted due to insufficient capital. However, if you have slow-paying clients or only get paid once every 30 or 60 days, maintaining that cash flow can be quite a nightmare.
Online invoice financing and factoring companies are now offering a solution for those situations. Through invoice factoring, you don’t have to carry the burden of waiting to get paid and have the money you need to keep your business going. This guide will show you just how factoring works and why we think it’s right for your business.
How Does Factoring Work?
Invoice factoring is a different kind of financing that allows you to have access to the funds you need in a quick and timely manner. By “selling” your invoices to a factoring company for a nominal fee, you can exchange them for a lump-sum payment, enabling you to get the funding you need to keep your cash flow balanced and your business afloat. The factoring company will then handle the payments of your customers based on the invoices you sold.
When Do You Need Invoice Factoring?
Invoice factoring can be useful and beneficial to small businesses for a variety of reasons and situations. Most business owners are faced with the dilemma of waiting for their clients to pay them their balance. It takes a tremendous amount of determination and effort to plan around an erratic cash flow due to the slow, unpredictable client payments. Factoring eliminates the need to wait and plan around your customer’s payments by ensuring a reliable cash flow.
Taking on Bigger Projects
There are several scenarios in which invoice factoring can be critical for your business. One such situation is accommodating a big project from a demanding customer. Having very little capital to work with can limit your ability to take on those huge orders, which can be just the break you need to turn your business into a profitable venture. Without enough working capital, you’ll be stuck working on small projects with minimal payoff. TAs a workaround, you can use the money from invoice factoring and get the capital you need to start working on that big project of yours.
Meeting the Demands of Your Customers
Another good scenario where invoice factoring is useful is in expanding your inventory to cater to more customers. Again, this requires a significant amount of funding to pull off, which can be challenging for any business that’s just starting out. If the demand for your product is increasing and you want to double down and meet that demand, you’ll need the help of a factoring company to give you the funding you need. Factoring can produce immediate capital to allow you to expand your business and meet the demand.
By looking at those situations, you’ll see just how essential invoice factoring is to many businesses. Instead of just letting yourself power through those days where you’re strapped for cash while waiting for payment from a client, you should instead look for a factoring company you can partner with to help you get the funding you need.
Porter Capital has always been the leading name when it comes to offering working capital solutions to businesses of all sizes. As a direct lender and factoring company, we make it possible for you to get your business running and earning by offering instant funding for your business. Contact us today to take advantage of our flexible financing solutions.