The natural ebb and flow of small business income can make some weeks a [financial] breeze while others may have you questioning whether you can make payroll the following week.
With banks continually tightening the belt, many savvy small business owners are turning to alternative means when it comes to generating consistent working capital.
1. Obtain Cash Without Debt
Selling an invoice is NOT the same as a bank loan. Even if you are able to get the bank to lend you money, at a reasonable rate, it is still a debt on the books. Was taking on more debt part of your small business plan? Probably not.
2. Get Cash Fast
Factoring deals is fast. Matter of fact, once your account is set up; you often receive cash within 24-48 hours – every time you factor an invoice. Try that with a bank.
3. It Is Not YOU, It is Your CLIENT That Matters
A Factor is going to look to the strength of your client (the payor), not you. That is good news if your credit or business has hit a few bumps in the road as you try and build (or re-build) your business. It can also help you avoid offering terms to a customer that is not a good risk.
4. Selling Invoices Is Your Choice
You don’t have to Factor every invoice. That gives you the flexibility to get working capital when you need it. Don’t need additional cash, don’t factor any invoices. Need extra cash, factor some additional invoices for an additional cash infusion. You are in control.
5. It Is Your Money
The factor is not going to tell you what to do with the money they send you. In other words, they are not going to say you have to use it to pay a certain bill or buy equipment. You need cash, not another boss. It is your money; spend it where you think best.
Most small businesses start factoring out of a need. The need to expand or the need to get additional working capital to stay in business. Whatever their need, many continue to use factoring long after the immediate need has passed – only wishing they found factoring sooner.
Want to learn more about factoring invoices? Visit our websitel www.durhamcommercialcapital.com
Scott DiBerardinis, Business Development Manager of Durham Commercial Capital. Visit our website at www.durhamcommercialcapital.com to lease more about Accounts Receivable financing.