Receivable factoring allows you to sell invoices for instant capital.
Receivable factoring enables your business to have fast access to cash by allowing your business to sell account receivables for products or services to companies that factor the invoices. They give you cash for the invoices, and also collect the payments and generate reports related to payments. This is an important part of any new business’s success. This transaction is also known as receivable funding or financing.
Often times new businesses will outgrow their operating capital so they need instant capital for general operating expenses. Sometimes cash flow can be slowed down if invoices to customers aren’t paid on time. By going through receivable factoring and selling off your invoices you will get the cash quickly and also won’t have to worry about processing the payments. You also are able to increase sales by extending special credit terms to customers.
The biggest benefit that businesses find with receivable factoring is that there is always the availability of cash on hand in the form of invoices if needed. This eliminates the hassle of getting approved for large lines of credit or a traditional business loan which would have to be paid back with a pretty high interest. There are costs incurred with this financing, but it is still better than a traditional loan or financing option.
It is easy to get approved for receivable factoring because your customer’s credit is what it is based on. If your new business hasn’t established a business credit history yet that is fine as you will have access to capital while you work to properly build business credit. This will enable you to get more financing down the road if needed. You can also easily get approved without having to give up any collateral.