5 best reasons that make factoring companies the best financing option
Posted: Mar 23, 2017
Cash is the most important thing that a company requires to be in the rat’s race of business. Where transactions for different business purposes are a regular scenario, you cannot neglect the benefits what effective cash management can offer you. If you have a small but developing business, usual financing methods can help you with the cash flow, but for improving it, you need a better option. And what is better than factoring companies which provide you with those beneficial opportunities.
Check out the details and benefits that these companies have in offering for you.
What is a factoring company?
A factoring company is a financial organization who buys invoices from business suffering from financial crunch or issues related to cash flow. These companies directly make purchases of invoices instead of lending money to the firms. Although there are different business models, the working procedure is relatively same for every factoring company.
5 excellent reasons making factoring companies best financing option
1. Variety of invoice factoring
Availability of different types of invoice factoring is also considered as one of the many advantages provided by such companies. Some of the invoices factoring types are as follows:
1. Small business factoring
2. Recourse Financing
3. Credit card factoring
4. Non-recourse factoring
2. Risk free
If you consider the idea of taking help from a financial company, you would be made aware of the risks involved in the transaction. But an authentic factoring company can assure you of a risk-free transaction depending on your invoice factoring type. While all the invoice factoring types are risk-free, non-recourse is considered the safest option.
3. Help in maintaining business
Problems in cash flow usually occur in times of billing draft drought. If you are a business person, you might be aware of the difficulties in account management during this phase. There may be certain unfavorable situations that can put you in such a drastic situation. Those situations may be because of:
- Late payment by payers or customers
- Poor performance of the company
Being an excellent source of secondary commercial financing, these factoring companies help those businesses who struggle to stay afloat in the above stated adverse financial situation.
4. Competitive rates
Business has various obligations in their short term. When you take the help of factoring companies, they utilize your invoices and help your business sustain in the market. A renowned company having experience in this field will offer you affordable invoice factoring rates than the other financial houses.
5. Support to come out of debts
Taking a loan from a bank to stabilize your business can be an option, but it would again make you a debtor to the bank. But in the case of a genuine factoring company, they provide you a debt free transaction. Not only that, these factoring companies can provide you a maximum of 90% of your invoice amount as cash, minus the worry to pay it off. Initially, you are given an advance amount, and the rest, after the invoice is received by the client.
These are some of the top reasons that make factoring companies a financially secure and one of the best alternate options without any flaw. If you find the concept of these companies fascinating and want to reach them, it is suggested that you choose the service of an authentic and professional one only.
With hundreds of invoice factoring companies in North America, business owners have many choices.