The driving force of the United States economy is small business. Small businesses comprise the bulk of economic growth and new job creation. However, without the benefits of working capital, the small business owner can often find his hands tied. One way to free up the money necessary for business growth is through the innovation of invoice factoring. Now you can find the help you need in financing your small business in a tough economic climate.
Understanding Invoice Factoring
Invoice factoring is a financial transaction where a business sells its invoices to a factoring firm at a discount. In exchange, the firm provides immediate money with which to finance continued business. Factoring is not a loan – it is the purchase of a financial asset. Banks are in the asset lending business and are used to making collateralized loans based off of your unencumbered assets.
Most small business don't have this type of collateral, not to mention the two years of profitability before a bank will even let you apply. Invoice factoring is not concerned with your hard tangible assets or your time in business; rather, it is primarily concerned with the strengths of the debtors. Invoice factoring is of tremendous advantage to those businesses that have a reliable, consistent customer base.
Collecting On Current Invoices
One of challenges small businesses face is the timely collection on invoices. Many businesses do not get paid right away for delivered products/services. This can seriously impact cash flow, and make it extremely difficult to provide new orders quickly. In tight credit times many customers delay paying an invoice as long as possible, which puts your company in a cash bind.
Invoice factoring serves businesses that do not get paid in a standard billing cycle by advancing a large percentage of the invoice total. An invoice factoring firm considers the credit value of the business client list and can provide funding a small business needs quickly. The factoring company now ‘owns’ the invoice, and they take the responsibility and provide the resources in the collection process.
Getting Your Funds Quickly
In this tough economic climate, it is necessary to have funds on hand in order to accept new customers. Materials and funds to pay workers are often needed long before the customer’s invoice is paid. One of the most frustrating moments for a business owner is turning down a large order due to a lack of funds.
By using invoice factoring, you can eliminate the 30- to 90-day period it typically takes for customers to pay their invoices, and you’ll have the immediate cash on hand you need to run your business.
Using an invoice factoring company gives you the upfront revenue needed to prevent potential clients from going to one of your competitors. It can also serve to ‘level out’ extremes in billing and collection cycles that can often plague a small business. This consistent and continuous cash flow facilitates the steady growth of your business.
If you need a committed invoice factoring company, Bay View Funding is your solution. Bay View Funding specializes in invoice factoring, helping manufacturing, distribution and service companies, including freight transporters, to grow and prosper. Bay View Funding is strongly committed to providing businesses with convenient invoice factoring to solve their cash flow challenges. Visit Bay View Funding at www.bayviewfunding.com to increase your cash flow now.
Heather Preston. invoice factoring
- Bay View Funding has provided businesses with invoice factoring to solve their cash flow needs since 1985.