As a business owner, you’re definitely no stranger to the challenges of managing cash flow, particularly if you’ve just started out, and are attempting to make a name for your company. Late client payments, unexpected (and unwanted) expenses, as well as seasonal revenue fluctuations can congeal in short order, and take a hefty toll on your company’s financial health and overall progress.
However, what if you could turn those pesky unpaid invoices into a reliable and consistent source of immediate funding? The secret lies in a little-known, but increasingly popular solution known as Invoice Factoring, which can help you overcome cash flow constraints, without having to worry about the hassles associated with banking, or other forms of traditional lending.
WHAT IS INVOICE FACTORING?
To put it simply, Invoice Factoring is a convenient funding option that allows businesses to “sell” their outstanding invoices to a third-party company, in exchange for a nominal fee. The company in question then advances said businesses a percentage of their invoice amounts (typically 80-90%) which acts as a source of fast and easy cash.
Once the clients pay their invoices, the company releases the remaining balance to you, minus their fee. That’s just the tip of the iceberg. Let’s do a deep dive to learn about the fine details of this unorthodox, yet highly effective funding option!
1) IMPROVED CASH FLOW
By advancing a portion of your combined invoice amounts, you can utilize Invoice Factoring to provide a much-needed influx of cash to help you manage your finances, and deal with unexpected complications that may pop up from time to time.
2) REDUCED RISKS
Invoice Factoring offers a convenient solution that helps eliminate the risk of late payments from clients, ensuring a steady stream of cash to fund your operations. The secret lies in your invoices themselves, which you can utilize to great effect.
3) INCREASED CREDITWORTHINESS
Generate and maintain a much stronger credit profile that will resonate with future lenders, suppliers, and other stakeholders. It’s a two-factor solution that works in the background to better your business as you move forward.
4) ACCESS TO WORKING CAPITAL
Invoice Factoring provides a flexible and scalable financing solution that lets you grow your business, without being tied to traditional financing sources, such as banks, who demand stricter conditions.
5) REDUCED ADMINISTRATIVE BURDENS
Let a third party handle the tedious tasks of invoicing, collections, and accounting, which in turn can free up your time to focus on core business activities, the pursuit of new clients, and a faster growth trajectory.
6) IMPROVED CASH MANAGEMENT
Invoice Factoring allows you to better manage your cash flow and balance sheet by anticipating and preparing for seasonal revenue fluctuations. This is especially handy for startups trying to build a solid foundation within the first few years of operation.
7) ENHANCED CUSTOMER RELATIONSHIPS
By providing your clients with a seamless and convenient payment experience, you can strengthen your existing business relationships, while encouraging both repeat business, and word-of-mouth referencing.
8) SCALABILITY
Interested in growing your business easier and faster? Invoice Factoring can help you accomplish both, quickly and efficiently, without being constrained by traditional financing limitations.
CONCLUSION
Invoice Factoring may not be the first funding solution you think of, but it is one of the most convenient, and effective. Make your outstanding invoices work for you, instead of sitting around worrying about them. It’s a proactive solution to immediate cash flow needs, without having to set food inside a bank.
Essential Capital Solutions offers Invoice Factoring alongside an array of ancillary services, all designed to help businesses cover costs, invest in their futures, and grow at a faster, more effective rate. Contact us today, and let us help you overcome your funding challenges, so you can stay on track without interruption!