Invoice Factoring Drives Growth; Businesses Invest Elsewhere

Something is seriously wrong with the world! Just think about it. We have made a significant development in the electric cars department, still people preferring gas-run cars are a majority. Governments are heavily promoting the use of solar power, yet the idea is conceived in very few areas. Similarly, businesses are still going for loans and credit insurances during cash-crunch situations even if they have a very risk-free alternative funding method called invoice factoring.

We conducted a study to find out where do sellers go when they are in need of urgent cash. Following were the results:

• 48% of them resort to bank loans
• 32% of them prefer taking a credit insurance
• 10% seek out help from friends and relatives
• Rest look for the other options at their behest

The average percentage of sellers who would like to avail invoice factoring was not even of a significant size so that it could be mentioned.

The matter with invoice factoring is that there are many false rumors surrounding this easy and unique source of funding, which makes businesses doubt its efficacy. So, we don’t blame the sellers, but the system that failed to create full-fledged awareness about this amazing cash-replenishing tool.

In essence, invoice factoring is basically a tool that sellers can avail when in need of cash without the provision of waiting. The process involves submitting the invoices to the invoice factoring company instead of your client. In return, the company pays you almost 90 percent of the total invoice amount minus a processing fee (1-5%) and pledges to pay the rest of the amount afterwards when the client has fully paid the invoice.

The funding method does not asks for credit score of the seller nor is it interested in his track record. All they are concerned about is the creditworthiness of the client under whom the invoice was issued. Once that part is clear, the financing agency makes payment.

For businesses looking for urgent cash without the stress of paying an interest or mortgaging their assets, this could be life-saving. It is one of the most easiest and risk-free form of funding that any kind of business owner can avail.

Invoice factoring drives growth! Business owners must understand the potential of this tool instead of investing their time, money, and effort in other riskful funding sources. Consistent cash flow will ensure your business never loses an opportunity.

In 1985, 1st PMF Bancorp was founded as a family run lender providing factoring, but as our clients’ businesses expanded globally.