One of the most common ways for entrepreneurs to launch and finance their new business is with a credit card and, in some cases, a bank loan. It’s not surprising that small businesses rely on credit cards for their day to day operations, as they are a lot easier to obtain than a line of credit or traditional bank loans. Larger, more established businesses will often use loans or a business line of credit to finance their business.
Invoice financing, also known as accounts receivable financing, is another business financing source that many business owners don’t consider. Invoice factoring works by providing you with access to your working capital. The invoice factoring company advances you up to 95% of your invoices’ cash amount, so you don’t need to wait for your customers to pay.
Why use invoice financing?
Unlike paying off a bank loan or a credit card bill, no interest rates are involved in invoice financing. In an invoice factoring agreement, you simply get cash advances of your outstanding invoices. All you pay is a small factoring fee of the invoice amount. Factoring fees are also a lot lower than credit card fees. So, all in all, you end up saving money.
When you use factoring to finance your business, you are not acquiring any more debt. You are directly selling your invoices to a third party (the factor), who advances you the funds you have already earned. If you use credit cards for your business, you will likely have high utilization, which could hurt your credit score.
Another reason why invoice factoring is an efficient alternative for business financing is that they will look at a customer’s credit score when deciding who to approve. Small businesses that might have little or bad credit and might find it challenging to get a traditional bank loan won’t have the same challenges with factoring. Invoice financing is easier to qualify for and is less time-consuming. You get approved and start factoring invoices in as little as 24 hours. Whereas, a bank loan or an additional line of credit could take weeks before being approved.
Invoice financing puts you in control of your business. You don’t have to schedule your business around your customer’s payment terms when you work with an invoice factoring company. Regardless of whether your customer has long or short payment terms, you will always get paid in 24 hours, allowing you to stay on top of all your expenses while growing your business.
How do I get started with invoice financing?
It’s a simple process. Once you’re approved, and your account is ready with the factoring company, you can start factoring your invoices. You simply submit your business invoices to the factor, and they advance you up to 95% of the cash total, minus the factoring fee, to your allocated bank account. The factor holds a portion of the invoice total in a reserve account. The actor then advances you the remaining amount on they collect payment from the customer.
Overall, getting started with an invoice factoring company is hassle-free and efficient. Getting approved is quick and easy, and you get instant access to your working capital. The consistent cash flow you receive through invoice factoring provides you with funding for your business’s future growth plans, expansion opportunities, or simply keeping your business structure flowing.
Benefits of working with Porter Capital
Porter Capital has been providing businesses with access to their working capital for almost 30 years. We are the oldest and largest factoring company in the Southeast and offer the lowest industry rates. Our clients work with a personal account manager to help them with all business needs. Not only do we assist in our client’s back-office A/R accounts, but our line of credit grows with your company.
Take advantage of our services and grow your business with Porter Capital today. Get your no-strings-attached free quote here and let’s see if we can work together.