The Surprising Benefits That Factoring Offers Your Small Business

When you rely on your clients and customers to pay their invoices on time, getting paid can be a difficult process. You won’t have access to the money you need to maintain and grow your business until those invoices get paid in full. This makes it hard to keep your business afloat. Factoring is one of the best ways to leverage those outstanding invoices and give you access to money when you need it without applying for traditional business loans. Here’s why you should consider using this financing option.

You Won’t Have To Post Collateral

When you factor those outstanding invoices, you’re essentially selling those invoices to a company that gives you an advance in exchange for what your clients owe you. The invoices act as the collateral to secure the advance. This means you won’t have to post collateral to qualify for the advance.

Companies Render Decisions Quickly

When you apply for a traditional business loan, you have to wait for the lender to review your application and render a decision before you can get the money you need. Depending on the lender, this could take several months. When you factor your outstanding invoices, you’ll get a decision and the money you need quickly. That means you won’t have to worry about making ends meet or have to put off your growth plans indefinitely.

Your Credit Score Doesn’t Matter

Traditional lenders look at your company’s finances as well as your personal credit score when deciding to issue any loans. If your score is low or your finances aren’t stable, you won’t get the funding you need. With factoring, lenders don’t care about your credit score. They care about your clients’ ability to pay those outstanding invoices. As long as they feel confident in settling the invoices, they’ll likely qualify you for the advance.

You Won’t Increase Your Business’s Debt

Carrying debt can take a huge toll on your business’s profit margins. The more you have, the more you end up paying to lenders each month. That makes it hard for you to grow your company and can put enough strain on your budget that you’re forced to close the doors for good. When you factor invoices, you’re not taking out a loan. You’re getting an advance on outstanding invoices. It won’t hurt your company’s finances and it won’t increase the amount of debt you carry each month.

If you’re looking for a flexible way to increase your cash flow, factoring is a great option. Once you find a company you’re willing to partner with, you’ll see these benefits firsthand.


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