What businesses use factoring services and what makes them qualify?
Invoice factoring is typically for businesses who do business to business (B2B) deals. Factors are typically more likely to lend to a business that is financially stable but might have a cash flow issue or needs extra money to grow. Most, if not all, businesses need to have consistent cash flow in order to grow and run smoothly.
What kind of business uses factoring? The most common industries that utilize invoice factoring are:
- Trucking and Transportation
- Oil and Gas
What are some reasons that a business would use invoice factoring?
- The want to expand and grow
- The want or need for re-branding or moving locations
- The business needs additional cash flow to make purchases
- They want to avoid delayed payments
Specifically, a trucking company would use factoring to:
- Purchase new trucks
- Take on more loads
- Hire more drivers
- Have the cash on hand to cover costs like fuel, maintenance, etc.
What are a few of the benefits that come along with factoring?
- Improved cash flow almost immediately
- Opened access to money normally tied up in accounts receivables
- Factors take on collection duties
- Having extra cash on hand to improve your business
- Non-recourse factoring can provide a form of protection from bad debt
- Factoring is an interest-free and debt-free funding option
If you still have questions about invoice factoring, contact us today risk-free to learn more! To start the application process, click here and fill out the form to have a CoreFund team member reach out to you!