Invoice Factoring: Hire Professionals to Reduce Costs
Invoice factoring is a type of asset-based financing. It is the process of selling your commercial receivable to a third-party financial company, also known as an invoice factoring company to obtain immediate cash payment of the accounts before their due date. As defined above, it is an important term and this form of asset financing is used commonly by small and large businesses. These financial invoice factoring companies typically charge a small discount or fee of about 2% in return for the invoices they buy. Many companies often use invoice factoring to improve company’s operational cash flow and working capital position.
Generally it is most commonly used by companies that are involved in sales and service industry because they have to wait for a period of around 30 to 90 days for payment. Waiting for such a long period of time for credits to be converted into cash can be very difficult for a company; as it leaves the company with limited amount or no cash at all to conduct operational functions of the organization. Speed Fund can help.
In situations like these businesses require liquid cash for its operations and to pay off its vendors so that more raw materials can be acquired. One common method for your business is to get a loan from the bank, but there are many technicalities and documentations related to this method and the process is too lengthy. Plus, these loans are not easily available, especially to small business owners.
In such cases, these third-party financial companies are the most effective thanks to account receivable factoring. These alternate landing companies function a bit differently than traditional banking procedures and instead of lending money, the company will provide a type of advance for your accounts receivable. In addition to all these, speed fund also offers business an option from the long term interest of the typical bank loan.
These invoice factoring companies work on different terms altogether. You need to fill in an application form and submit the copies of the invoices and receivables that are expected from your customers and get the funds within days. Before handing over the cash to you, the factoring company will verify the authentication of the bills.
There are a lot of benefits of getting cash in hand before the expected time which allows you to negotiate with your suppliers for getting additional discounts for paying early.
One of the major reasons why factoring companies have found such success is the fact that they do not look for perfect credit history from their clients unlike banks. They just check the validity of the bills and receivables that are presented and then give cash in return.
With cash in hand, a business has more opportunities and time to tackle problems. Hence, invoice factoring is the way to be. If you are looking for such a solution then look no further because we provide invoice factoring services and can bail you out of your cash issues. Get in touch with speed fund today to see the options you have.