Factoring is an alternative lending business process which many companies have found to be highly advantageous because it can put money in their hands immediately, so they don’t have to wait months for a bank loan to be approved. There is a number of other advantages to factoring which may prove highly beneficial to your business as well.
Easier Qualification and Approval
It is much easier to qualify for factoring with an alternative lender than is to be approved for a traditional bank loan. In fact, your business’s credit history is not really even a prime concern for an alternative lender, because it’s much more important to the lender that you have customers who pay their invoices promptly.
Accounts Receivable Turnaround
When you have to collect accounts receivable from your invoices, you’ll be obliged to wait for 30, 60, or even 90 days to be paid by your customers. By contrast, when you set up factoring with an alternative lender, you can receive payment for those invoices immediately, and put that money to work in helping your business to grow.
Since you’re not obliged to collect on the invoices from your customers, you will have little or no receivables processing necessary by your own personnel. When a factoring company buys your invoices, it becomes their responsibility to collect all the amounts from those invoices, and that means your collections personnel can be re-purposed for other tasks within the company.
Quick Availability of Cash
Many times in business, there are pressing needs for cash to pay for business expenses, payroll, inventory, and other assets. If you were to apply for a bank loan, there’s no way you’d receive the money in time to handle most of these expenses. By arranging for factoring with an alternative lender, you can have money in your hands in as little as a day or two, so that all your business expenses can be easily managed, and your operations can be conducted smoothly.
Thinking of using factoring for business growth?
Factoring can be a huge boom for almost any business if yours is the type of business which lends itself to factoring. At Capital Connex, we can help you set up a factoring arrangement which will be very beneficial to your business, and which can put cash in your hands very quickly.