When companies are holding too much debt, business owners can find their access to working capital limited and their options reduced. They may not be able to break the cycle of borrowing at ever-increasing interest rates and falling deeper behind in paying bills and paying off loans. This is when debt factoring can help companies get back on track and positioned for growth.
Debtors factoring lets a factoring company collect on a company’s debts and pay in advance to creditors a part of the amount that is collected. Debt factoring is comparable to the factoring company buying its clients debt. Factoring of debtors improves their cash flow quickly because the factoring company sends cash to clients right away so they don’t have to wait weeks and months for customers to pay.
One of the main advantages to debtor factoring is the speed of funding. At top factoring companies, clients can receive money in their bank account in exchange for their invoices as soon as within 24 hours after the paperwork has been approved. The factoring company does not specify how the funds must be used; the client can pay bills, increase inventory, buy needed equipment, whatever he or she needs to stabilize the business and increase profitability.
When cash flow struggles bring on business slowdowns or even shutdowns, companies can’t plan for the future or take on new customers. With debt factoring, clients can speed up their cash flow and, for instance, increase their inventory, develop a new product line, or improve their marketing. These activities can result in higher revenues and greater profit margins.
Debt factoring helps companies, regardless of their credit histories or financial past. Instead, the factoring company focuses on the client’s customers’ creditworthiness and credit scores when evaluating a potential client.
When you’re ready to explore the advantages of debt factoring, contact Interstate Capital, a leader in debtor factoring since 1993.
Click here for your complimentary cash flow consultation and no-obligation factoring rate quote.