Small Business factoring is a powerful tool available to entrepreneurs. In addition to instantly boosting cash flow, hiring a factoring company as an outsourced accounts receivable department removes the burden of processing payments and more.
Small business factoring can easily solve many cash flow problems caused by customers delaying payments 45, 60, 90 days…or even more. This can be especially true for cost-intensive businesses in the transportation and service sectors such as trucking companies, staffing companies, guard services, oilfield services, janitorial and maintenance companies, etc. Invoice factoring is accessible for small start-up businesses too. This is because Charter Capital purchases your invoices based on the credit worthiness of your customer rather than your credit, or how long you’ve been in business.
The benefits of factoring companies for small businesses are extensive and usually more than offset the factoring fees. Also what you can consider is how much you get to keep.
“If spending a little makes you a lot, doesn’t it make sense?”
Running out of cash is not an option for any business to survive, and raising capital for a small business is difficult and time consuming. Using small business factoring to quickly get additional capital in smaller chunks will get you the cash your business needs without risking a loss of equity or ownership.
Benefits of Using a Small Business Factoring Company
As a small business owner, you need steady cash flow to pay for payroll, insurance, and more to keep your company running. Factoring companies for small business are a common financial tool that can give you fast access to working capital.
At Charter Capital, fast cash at competitive rates is only the start. You also get:
- Customized funding that fits your unique needs.
- Small business specialists who understand your unique challenges and goals.
- A true partner to help you overcome challenging financial obstacles and to the extra work to make factoring work for you.
- Dedicated account managers who care about your business.
- Fast response with no hurdles to jump over.
We’ve earned a reputation for assisting small businesses with invoice factoring for more than 20 years. Long-term relationships and customer referrals demonstrate the positive results of our personalized service.
Small Business Factoring Can Be The Answer To Many Cash Flow Issues
It’s time consuming to collect on an invoice. So, when a company finances its accounts receivable, they are getting their money faster and without the cost and effort of the collection process.
With small business, freeing up working capital through invoice factoring can prove to be vital. The funds can be immediately invested into the business operation for new equipment, used to pay outstanding debt, or used toward payroll. It’s certainly more desirable than the alternative: chasing the customer for payment and defer everything else while the money is tied up in unpaid invoices.
“Working capital in-hand today is better than dashed dreams tomorrow.”
Invoice Factoring: The Small Business Loan Alternative
It has always been a challenge for small business owners to obtain bank financing. It’s especially true in today’s economy that most small businesses just can’t qualify for conventional business loans. The requirements can be a significant barrier: the company must have sizable assets, years of profitability and audited financial statements.
A majority of business owners do not consider other forms of business financing because they don’t know that there are alternatives to a traditional bank loan or an SBA loan. Many times they give up any hope of obtaining financing when they get turned away. The truth is that many times those alternatives can work better than conventional financing.
The biggest challenge for nearly all companies is their Accounts Receivable – the 30 to 60 day wait until the invoice is paid. During this waiting period, the Accounts Payable becomes due, employees and suppliers need to be paid. This leads many businesses into a “cash flow crunch”. While this is fine for large, well capitalized, companies with adequate banking reserves, it is a significant challenge that many business owners face every day.
How Does Small Business Factoring Work?
There are many ways to maintain a positive cash flow when growing your business and dealing with Accounts Receivable issues. One popular way to increase cash flow is Invoice Factoring. Invoice Factoring (also known as Accounts Receivable Financing) is the practice of selling your accounts receivable (invoices) at a discount to another company. You get the money from the company that you sold your accounts receivable to and they become responsible for collecting on the outstanding invoices.
The reason many businesses make this move is to ensure the continuous flow of cash to the business. Essentially, businesses who use invoice factoring are focusing on having most of the money now rather than all of it later. It can take time to collect on an invoice, so when a company finances its accounts receivable, they are getting their money faster and without the hassle of the collection process.
With small businesses, it is even more important to free up working capital through small business factoring. The money can be invested into new equipment, used to pay bills, or used toward payroll. Of course, the alternative is to chase the customer for the invoice payment and defer everything else while the money is tied up in the collection process.
As you can see, invoice factoring provides the needed working capital to meet business expenses without worrying about when your client will pay. It’s the business loan alternative that provides businesses with predictable cash flow and positioning them for growth.