Do you have gaps in your cash flow? Why you should consider factoring as a solution
As a small business owner, you are probably no stranger to cash flow shortages. Some months may be relatively abundant, but for much of the time, although you are doing good business and keeping up and running, the bank account may not reflect that. Invoice factoring is a simple way to fill those cash flow gaps. In those moments when you just need that little extra liquidity to invest in new equipment or fund a new project, invoice factoring provides an effective solution.
The benefits of invoice factoring
Invoice factoring is the sale of your receivable invoices to a factoring company, which pays you a percentage of their value upfront, providing you with easy cash. The beauty of it is that you are not taking out a loan, i.e., borrowing someone else’s money; you are simply receiving the value of what your customers owe you – before they pay it. How does this benefit you? Here are three key advantages:
- It is fast: When you make an agreement with a factoring company, you get your cash almost instantly. Between 70 and 90 percent of the value of your factored invoices is paid into your account, usually within 24 hours.
- It is debt-free: When you engage in accounts receivable factoring, you don’t take out a loan, so there is no debt incurred. You are essentially selling your property for cash. That means no debts in your books.
- You free yourself from having to collect payment: Having sold your invoices to a factoring company, you no longer need to worry about chasing your clients for payment. The factoring company takes on this task, meaning you can use your resources for more productive purposes.
Kore Capital is a business financing solutions provider. We can offer cash flow solutions such as invoice factoring to help you access working capital and grow your business. Contact us for more information.