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Factoring your invoices offers a number of advantages for your business. The 9 most important benefits of factoring are…

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Factoring your invoices offers a number of advantages for your business. The 9 most important benefits of factoring are:

1. It provides you with immediate cash

The most important benefit of factoring is that it provides your company with immediate cash. This funding should help fix your cash flow and give you resources to pay your expenses and take on new clients.

2. It lets you provide payment terms to clients

Most large commercial and government clients insist on paying invoices on 30-day to 60-day terms. If you cannot offer payment terms, your chances of landing these companies as clients are minimal. Factoring enables you to offer payment terms to your clients because you can finance your invoices shortly after creating them (as long as the goods/work has been delivered). Therefore, you can offer terms without the negative financial consequences.

3. It helps you manage the credit of your customers better

One of the major challenges of offering payment terms is trying to determine the creditworthiness of your commercial clients. Most factoring plans include customer credit reviews as part of their solution. This feature allows you to outsource this important task to experts.

4. It is relatively easy to get

Invoice factoring is easier to get than most solutions. The primary requirement is that you have invoices for delivered work that are payable by creditworthy customers. Aside from that, your business must be free of liens/encumbrances and legal problems.

5. The line can increase as you need it

Lines are tied to your invoice balance. Therefore, they can easily increase as long as your invoices increase and the credit quality of your clients remains good. This feature makes invoice factoring an ideal solution for companies experiencing an aggressive growth stage and needing financing that can keep up with the level of growth.

6. It can be a short-term solution

Factoring can be used as a short-term solution if you forecast that your current cash flow problems are temporary. Most factoring companies are happy to structure a 6-month plan to help you through your cash flow problems.

7. It uses your invoices as collateral

Most conventional solutions, such as lines of credit and loans, require substantial assets as collateral. These assets can include real estate, inventory, equipment, and so on. Factoring is different. It requires only your invoices (accounts receivable) as collateral.

8. It does not require you give up equity

One important advantage of invoice factoring is that it does not require you to give up any equity. This advantage is important because when you give up equity, you also surrender not only a portion of your company but also some of your control in the business. Furthermore, selling equity during financial distress to meet a cash flow crunch may not get you the best price for it.

With factoring, the relationship is purely time-based. And once the contract is done (unless it renews), everything finishes. You never have to give up any equity in exchange for funding.

9. It can be used by small businesses

Another important advantage of factoring is that it can be used by truly small businesses—even those making as little as $20,000 a month. Trying to get a regular business loan or line of credit for those amounts is nearly impossible, since many lenders rely on volume to make their profits.

Source:  Commercial Capital LLC a financial services provider –  www.comcapfactoring.com and phone is 877-300-3258.