Invoice Factoring, the Preferred Alternative to a Bank Line of Credit
Small to midsize businesses often struggle with cash flow at some point. Others wish to seize an opportunity to expand. For either of these situations, having cash on hand is necessary.
Consider the invoice factoring to solve your short term cash flow problems.
Factoring Offers Adaptability
A factoring company will work with you to provide the financial assistance you need while responding to your business changes. A factoring line balances your accounts receivable (only from credit-worthy clients) with your reliable ability to provide your service or product to your customers.
If your needs change, contact your factoring agent. For example, your account will expand when you add clients. You will be able to change your credit within a few days in most cases.
On the other hand, creditors set credit limits with the plan to cover their loan by your cash flow and collateral. If your needs change due to client shifts, you will need to renegotiate a new credit agreement with your lender.
Short Wait Time for Cashflow
Most invoice factoring comes through within a week. From the initial contact through receiving the first check, factoring consolidates and speeds up the timeline for cash to flow into your organization.
Receiving capital from a line of credit with a bank is a much longer process. Even when you provide your company’s financial information quickly, the lender can end up taking several weeks or months before your account becomes active.
Avoid Maintenance Issues
Most factoring businesses do not require their clients to meet constricting agreements. They usually care more about clients not going bankrupt and completing work for paying clients.
Most lenders require credited companies to follow agreements. The specific contracts vary by the company, but some common ones include:
- Keep an accurate account of inventory
- Keep a base net worth
- Maintain financial ratios at a base level
- Provide updates on material changes
CoreFund Capital provides financial solutions for businesses across the US. Contact our team today to explore how invoice factoring can help maintain and grow your business.