Although there are countless types of businesses that can benefit from the advantages of factoring their accounts receivable, here are three common ones:
New Businesses – whether a brand new start up, or still within the first two years of operating, gaining access to capital can be difficult without a proven track record. Factoring can be a great solution, as the factoring company relies on the strength and ability of your customers to pay your invoices, not on one or two years of financials.
Growing Companies – as companies expand, they can quickly outgrow their existing credit facilities. This can lead to pressure on certain aspects of the operations, such as collections, accounts payable, and bidding on new projects. Factoring is a good option to help supplement your existing credit facility, or bridge the gap while waiting to qualify or transition into a new one.
Contract and Seasonal Work – sudden changes in a company’s volume of business can quickly lead to cash flow shortages. A surge in business can quickly drain your bank account when payroll expenses need to be paid biweekly, and operating and supply costs are required to be paid upon startup, yet your invoices will not be paid for 30, 60 or even 90 days. Factoring your invoices allows your company to have the cash flow needed to meet these payment requirements.
Why not give us a call to explore the advantages of factoring.