Handling cash flow issues with invoice factoring

You may well have a good, long-term relationship with a financial institution. And perhaps this relationship has given you a good line of credit to drive your business growth for several years. However, there may still come a time when you might outgrow your current credit facility. When that happens, you could seek out another one. Or, you could try invoice factoring. Factoring is more versatile and scalable than most loan options. Factoring can help your company’s growth and liquidity at any stage of its development.

How can your business outgrow your bank?

Getting credit isn’t all that easy to do as a small business, especially when you are starting out. It can be just as difficult to maintain a productive relationship with a financial institution as your business grows. Some of the reasons for this are as follows:

• A lack of sector-specific expertise: As businesses grow, they need banks that understand their business and can provide sound business and financial advice in addition to funds. You may well find that, when your company reaches a particular stage of its growth, your bank lacks the expertise to advise you on further steps.

• Financial products that no longer suit your needs: As your business evolves, so do your financial management requirements. When you find that your bank’s products no longer seem to fit comfortably with your needs, it might be time to move on.
• A lack of scale: If your business has been successful, you will probably come to a point where you feel it is time to take a giant leap to the next stage of growth. You may then find that your bank lacks the scale to offer you the financial services you need for that move. They may also be unwilling to take that next leap with you

How invoice factoring can help

If you choose invoice factoring instead of a conventional bank loan, these obstacles are no longer an issue. Since factoring depends on your accounts receivable, not a bank’s loan criteria, you can scale it in line with your needs and resources. You do not have to worry about any limitations on the lender’s product offering or policies. You simply sell your receivable invoices and receive the cash you need. Also, factoring is not curtailed in any way by the ins and outs of a particular industry. However, most factoring companies deal with a number of specific industries, and they develop a strong understanding of each of them. Your factoring company would therefore be able to offer specialized advice to help you on your growth path. 

Kore Capital Corporation is a business financing company that specializes in offering lines of credit, particularly through factoring, to firms in several different industries. For more information on invoice factoring, contact us.