If you’re considering selling your business’s unpaid invoices, invoice factoring is a service that lets you do just that. If you’re unfamiliar with invoice factoring, you can check out one of our other posts that goes into detail about everything involved with this service. In summary, invoice factoring is an alternative financing service provided by a factor that buys your unpaid invoices in exchange for a cash advance on the balance, minus a small percent taken as as a fee for using the service.
Some of the benefits to using invoice factoring are:
- Improves cash flow and allows your business access to additional working capital
- Funds are normally obtained between 2-7 business days
- Approval rates are high due to the creditworthiness of your clients being the focus
- Less hassle, less restrictions and more flexible than traditional loans
- The factor takes on collections duty, allowing you to focus to growing your business
The stigmas that used to be associated with invoice factoring and other types of financing are definitely disappearing. There are millions of dollars being factored in multiple different countries these days. Although any means of financing a business used to be seen as desperate or a last resort, those stereotypes are diminishing as more and more businesses are using alternative lending tools and services to grow and thrive.