Invoice financing is a simple short-term cash solution that provides long-term growth potential for businesses. Better known as invoice factoring, this method allows businesses to avoid high interest bank loans by allowing them to turn their unpaid invoices into real capital. By factoring your invoices at a discount, you are able to turn outstanding customer debt into cash flow for your business. You can use that cash flow to cover your business expenses, payroll, equipment and supplies, and anything else that you need to operate your business.
Here’s How it Works:
- You deliver goods or provide a service to your customers
- Instead of waiting 30, 60, or even 90 days for your customers to pay, you send your invoices to the factoring company right away
- You will receive a cash advance up to 100% of the invoice amount
- The factoring company will collect the amount owed from your client
Click here for our illustrated steps of turning your invoices into working capital to keep your company operating and growing.
Simply put, you “sell” your invoices at a discount to a factoring firm. These discounts start at under one percent. The firm finances your business within days and you have capital to stay fully operational. As long as the outstanding invoices are paid by your customers within a predetermined time period, you can continue to factor as many invoices as you like and turn them into cash flow within a matter of days. If the invoices are not paid within the time limit, you are responsible for whatever sum is left unpaid.
Invoice financing is a cheaper solution than flat out selling your invoices or invoice discounting. Outside of factoring, companies are also able to leverage their outstanding invoices for loans from special firms or can sell the invoices outright at a discount meaning that you will not be responsible for the unpaid portion. Borrowing against your invoices can sometimes still result in a high interest rate and selling invoices outright carries larger discounting.
With so many businesses looking for alternative ways to finance their operations without taking out loans, invoice financing is an attractive solution to your financial problems. Pay your employees, cover the equipment and supplies that you need, and keep your company running and growing using only the business that you have already done.
Take the next step with Interstate Capital!