Improving Your Companys Cash Flow With Invoice Financing

Invoice financing - paid invoice Invoice financing is a great way for companies to improve their cash flow without taking on new debt or having to apply for a bank loan. In the past, these were two of the primary ways that businesses raised capital. Many depended on angel investors or banks.

With much of the money drying up, companies are being forced to look for creative, alternative ways to raise money. Invoice financing qualifies on both fronts. Businesses that in the past may have passed on the opportunity to utilize this form of commercial financing simply because they didn’t have to consider it, are beginning to see the benefits of utilizing it.

Invoice financing is a dependable and fast way for a business to raise capital. Companies sell their invoices or accounts receivables to businesses called Factors. These Factors will purchase the invoices for 70% to 90% of their full value. These monies are paid right away. This allows businesses to generate capital in a matter of days. Instead of the alternative of waiting the 30-60 days that they would normally have had to. That is if the client paid according to the invoice arrangement.

For some companies, waiting simply isn’t an option. They might be in dire need of money. Without a quick infusion of capital, they may not be able to pay their employees. In addition, they may also have trouble paying their lease, utilities or purchase supplies. If they are having a difficult time bankrolling the necessities then it goes without saying that they will be unable to invest in growing their business by attracting new customers and taking on new jobs. Both of these things which are necessary in order to right themselves financially.

Invoice financing can improve a company’s cash flow almost immediately. Most Factors are able to pay out money in as little as 24 hours. If it is a company’s first time working with a factor, it may take a little while longer, but not much.

In order to use this type of financing, it is very important that businesses have clients with very good credit histories. No Factor will purchase the invoices of a company that has clients that are not apt to repay what they owe. This is because they do not have the assurance of receiving payment for the money they paid for the invoices. It becomes too risky of a proposition for them.

Invoice financing is a great way to remedy a company’s cash flow problems. It is an excellent option because it is available to companies that have average-to-poor credit and also startups. These two types of businesses often find it most difficult to attain financing through traditional sources, namely, banks. Invoice financing opens up an available and dependable source of capital. This is available even for such businesses. In addition, this also remains an option for older companies, in good standing, that prefer generating capital without debt.

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