How Can Invoice Factoring Benefit Your Small Business

If you’re a small business that only deals with consumers (B2C), invoice factoring isn’t going to benefit your business as you’ll instantly be paid upon selling products and services. However, if you deal with other businesses (B2B) you may find you’re always waiting for your invoices to be paid and when you’re only a small business, that can sometimes lead to many problems.

Often, small businesses will look to secure capital from banking institutes to get the finance they need to survive, but seeing as only 1/5 businesses manage to secure finance from banks, it’s never a guaranteed route, and sometimes it’s not even a route small businesses consider. If you’ve already tried to secure financing with your bank, but they haven’t been willing to provide it, it may be time to look at invoice factoring as an alternative to help keep your business alive.

With Invoice Factoring You’ll Get Paid in One Day

Not all factoring companies are going to be able to offer this service as some of the standard services will still have a lock-in time until you can request funds for an invoice, but the services worth looking into will provide you with the capital in as little as one day. This means that invoices that usually take 7-90 days to be paid can be paid within as little as a day minus a small fee.

This is great for small businesses who need to continue operating without having to wait weeks for invoices to be paid. When you’re dealing with other small businesses, you’ll find that invoices will be paid quicker because they know how it feels to have to wait, but when you’re in partnership with bigger businesses, their accounting departments will only pay invoices within set periods.

Cash Out When You Want

The process is very easy when it comes to cashing out unpaid invoices. By using a simple online dashboard, you’ll be presented with all the invoices that are currently unpaid. By clicking “Get paid now” next to each invoice, you’ll be able to get the funds you need when you need them. The great benefit of this is that you can request a cash out for one invoice on Monday and if you need further funds on a Thursday, there’s nothing stopping you from cashing out another invoice there and then. Obviously doing this is going to incur more costs, but it could be the only way for some small businesses to survive.

No Obligation Invoice Factoring

A lot of the good invoice factoring services out there will offer no obligation services which means you don’t have to cash out your invoices if you don’t need to. Always make sure you’re using a reputable company that has no hidden fees or questionable contracts in place like making you cash out all invoices from the same clients.

Choose a company that lets you choose what you want to cash out and when so you can save costs on invoice factoring when you don’t need the service. There are a lot of great companies out there when it comes to invoice factoring, but there are also companies out there that will be trying to take advantage of your small business so it’s always important you do your research beforehand. Choose a factoring business that is totally upfront with their fees and you’ll find you can stay in control when it comes to factoring invoices.

Grow Your Business Without Having to Worry About Unpaid Invoices

The greatest benefit of taking advantage of an invoice factoring company is that you’ll be able to grow your business without having to wait weeks or even months for invoices to be paid. This means you’ll be able to invest in new inventory, pay bills on time with lower interest rates, and keep your employees happy with wages paid on time. Obviously, there are higher costs involved than when dealing with banks, but it’s not a great deal more and an invoice factoring company could be the way forward in helping your business succeed.

A lot of businesses are put off by standard invoice factoring businesses because they’re not sure how the process works. But with a simple application process and a free online dashboard to keep your invoices organized, the process couldn’t be any easier. There are many benefits to using factoring companies to provide you with invoice factoring services, but there are common flaws as well, such as higher fees than bank loans. However, sometimes it’s the only way forward in securing your business’s future.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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