Quick and Easy Financing for Your Business
Factoring companies can provide a quick and easy funding process. That might seem impossible in today’s economy and banks incredibly tight lending practices. It is not. Factors work differently and base their financing directly off of your accounts receivables or purchase orders.
Let’s say you are trying to get a line of credit at a traditional bank. First, good luck! Chances are they are not going to loan you a dime. Regardless of your history. The problems go even deeper when you have:
Concentration issues. When you only have a few clients providing the majority of your revenue, banks see you as high risk.
Personal credit issues. Banks require personal guarantees and if you have any personal credit issues this also puts you in a poor credit position.
In business for 2 years or less. Banks want to see credit history. If you have only been in business for 1-2 years this puts you in the high-risk category.
Bottomline, it can be difficult to impossible to get a line of credit. And even if you do get approved it can take months to close the loan. Most of the time the company needs that money now, not 30-60-90 days from now. A factoring company can fund your business quickly and easily in as a little as a few days. Waiting 30-60+ days for payment of an invoice ties up your working capital. Your company does not have the luxury of waiting around until or if they get approved for a bank loan.
When working with a factoring company, the application is simple. They need the application completed, you provide copies of your invoices and typically that is all the information needed in the approval process. Best of all this can happen in as little as 72 hours and factors are motivated to fund you. The factor advances you up to 90% of the invoice amount immediately and gives the remaining balance when your clients settle in full.
An additional benefit is for small businesses that do not have a collection department or adequate personnel. The factor provides you with the cash and then collects on them. The business does not need to worry about collecting the funds. They have paid the factor to do that for them. At the same time, this payment is taken out of the companies accounts receivables collected from the client. This means the company keeps their cash flow moving along with no cash needed to pay the factor.
Working with a factoring company can be an incredibly effective and fast way to get the cash your company needs. The application process is simple, the actual cash in your hands is fast and you do not take on any additional debt. It can be a win-win for everyone involved.