At one time or another, a company will experience growing pains. Even when a company has steady business, it can suffer from poor cash flow.
Early on, a business might have a handful of clients and might have one or two slow-paying clients. But with growth, that waits time – not to mention the stress – can be compounded as the invoices stack up with each new client. Thirty days becomes 60, then 90, then clients stop answering your calls or go out of business altogether.
As a business owner, you have a myriad of expenses needing to be paid with the money tied up in those invoices: vendor payments, payroll, state and federal taxes and investments back into your business.
Increasingly, more and more businesses are turning to factoring companies like Interstate Capital to close the gap between finishing a job and getting paid. Factoring, also known as accounts receivable financing, provides business owners access to the money sitting in their invoices.
Unlike a traditional business loan or line of credit, factoring is a quick and easy way to your own money – without the debt or tedious collections process. Imagine having access to 75 to 90 percent of your invoice balances within 24 to 48 hours.
The quick turnaround time allows you to focus your time on other important aspects of your business. Business owners need to focus on sales, not collections.
The cost of invoice factoring
Remember that factoring companies specialize in invoice creation and collection. They process hundreds, if not thousands, of documents a day. It’s like having your own back office team. The best part is that work is already included in the factoring fee.
When considering working capital solutions, it’s important to look at factoring companies that can grow with you as you expand your business.
Factoring Means No Limit Funding
Businesses typically expect payment in 30 days or less. But your customers can have their own cash flow challenges, and they may not be able to use credit or existing cash reserves to pay suppliers and other service providers. This all-too-common reality can quickly stall the potential of a growing business.
This leaves businesses unable to meet its own basic operational requirements (i.e., payroll, purchase supplies, etc.). Or, what about quarterly and yearly business taxes? The government is not keen on waiting for its money regardless of a business’s financial situation.
In the end, poor cash flow can threaten the credibility and long-term viability of your business. No business owner wants to be known as the person who doesn’t pay their bills or takes months to pay.
Factoring provides both the credibility and efficiency businesses need by expediting the process of getting paid. Unlike bank lines of credit and traditional bank loans, factoring can easily scale to meet your business’s growth, both in the number of customers and volume.
Access to this working capital through factoring is not affected by your company‘s creditworthiness. Factoring looks at your customer’s credit when purchasing an invoice.
Small Business Credit is Challenging
Businesses of all sizes can find access to cash extremely challenging. And if your business is relatively new, there may not be enough credit history to satisfy the bank’s requirements.
In this example, a small business may be denied access to needed funds simply because they are new. Factoring companies like Interstate Capital work with businesses of all sizes and from all industries to provide financial resources and relief that may have otherwise not been available to them.
And, of course, every business owner knows that timing is critical. Factoring often times significantly cuts down on the time between the application process, and when you receive your money. When you’re in need of working capital, you need answers and your money within days, not weeks.
The benefits of invoice factoring
When applying for factoring with Interstate Capital, consider these benefits:
- 24-48 hours access to cash from invoice submission and approval
- Relief from cash flow stress
- Working capital to meet payroll and tax obligations
- Access to working capital as your business grows
- Free up your team to focus on what it does best
- Back office support at no additional cost to you
Since 1993, Interstate Capital has helped businesses of all types get immediate access to the funds they need. If factoring sounds like a formula for your business growth, you can get an instant factoring rate quote today.