One of the major goals when running a business is to watch your company grow. It is important for you to see your business reach its full potential. In some cases, you may use credit lines or bank loans but these are far from your only option. In fact, there are smarter alternatives that you may be interested in finding out more about. One of these alternatives is factoring. Here are five reasons you should use this financing to grow your business.
Simpler Receivable Management
If you choose to factor then you will also reduce the expenses associated with processing invoices. This creates an easier way to deal with your accounts receivable.
Affordability Compared to Other Options
To factor is not free. However, when you put it alongside of the other forms of financing, it tends to be cheaper. Bank and credit financing are expensive with heavy interest rates. This is an inexpensive way to receive funding for your business. There are no fees and you factor at a discount.
More flexibility in Financing
Factoring accelerates the payments you earn. In fact, you are able to choose which invoices you want to factor. There is no long-term commitment, so whenever you need the cash, you can pick up this type of financing all over again. Sometimes you need new materials, equipment or if you’re struggling to meet the payroll, you just have to factor a couple of invoices.
Faster Accounts Receivable
Sometimes you have to wait up to 90 days before you see cash from your customers. This can be incredibly difficult when you need cash right away. Loans and other funding options also take a long time. You need to be able to get your money right away. This will lead to quicker business growth.
Easier to Qualify for Financing
Bank loans are often challenging. Even in the best economic climate, it can be difficult to qualify for a loan. The difference in factor financing is that your qualification relies on your customer’s credit rather than your personal line of credit.
Most businesses need to look into some form of financing. It’s rare for a business to be able to see real growth if it doesn’t use factoring, bank loans or credit options. When you factor, you pay less and are able to receive your cash right away. There are no waiting periods and you can watch your business grow quickly.