Invoice Factoring Benefits

Recap of recent article on the benefits of factoring. I just read this article on the benefits of invoice factoring that was really good.

Some of the main points:

1. Get an influx of working capital - this helps bring cashflow into the business for operations even when times get thin.

2. Improve cashflow without borrowing - no need to apply for a loan - it’s easier than filling out all the forms at a bank and then not knowing if they will approve the loan or not!

3. Supplier discounts - if you can pay the invoice faster - some companies give a discount.

4. Improves credit score - I never really thought about this one, but it makes perfect sense. If you have improved cashflow - you can lower limits on credit cards or if you use factors instead of a commercial bank loan - you avoid a liability on your credit score.

5. Save time! This one is a key benefit and could be at number one on the list. If you factor invoices instead of playing bill collector you can save time and do more of what makes the business grow. So the invoice factoring company essentially becomes the collector and you don’t have to make those dreaded phone calls demanding payment of the invoice. You get to leave that up to the factoring company.

6. You can offer credit to customers - then if they default you have limited liability - it’s up to the factor to collect (if non-recourse).

7. Increased leverage of accounts receivable.

These are all excellent benefits of factoring. Well written article - view the original if you have the time. Bottom line is that invoice factoring might appear to cost you money, but it’s a trade off because you save time and you could negotiate discounts with suppliers. This could end up saving you a significant percentage of your supply costs. So the cost is really only in appearance if you work it properly.

Good luck with your business!

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Business Financial Services

Invoice Factoring Benefits