Whenever you contemplate a poor cash flow period ahead within your business planning, you have the time to organize meetings with invoice factoring companies so that you can make advanced arrangements to boost your cash flow, just when you need it.
Increasing Your Working Capital
Without correct planning, you may need to purchase stock and pay employees while you are waiting for your customers to pay you on 60 or 90-day terms. Meanwhile, there are other bills to pay, and you will not be able to negotiate discounts when you need to ask for 60 days or longer terms for your own purchases.
Organizing a consistent overdraft with your bank is expensive, and the facility may be withdrawn just when you need it most.
Invoice factoring companies will allow you to complete orders with your customers, send the invoice to the factoring company, who will pay you, usually, within 24-48 hours. The factoring company will then be responsible for retrieving the funds direct from your customer. This puts you into a positive cash flow situation.
No Debt to Clear
As this is not a loan, you will not be adding a liability to your balance sheet or increasing any monthly loan payments to a bank or other funding institution.
When you use invoice factoring companies to provide you with the funds, you can choose to use this opportunity whenever it suits your business.
If you have an agreed funding arrangement with the company, following suitable credit checks, you can request funds with a short period of notice.
Your bank, conversely, may the take time to review your financial situation, need to see all the accounts for your company and then take the time to decide.
Therefore, the terms are as flexible as you require. As your business grows and your sales increase, your access to funding will also grow. The only negotiation is for the invoice factoring company’s fees.
