Why do Companies Choose to get their Financing thru Invoices Factoring?

There are many sources of funds a business can resort to at time of emergency. Traditional sources like bank loans and overdrafts are always there, but you noticed that most companies opting invoice factoring financing to infuse funds into the system. A change in trend, right?

In this competitive market where a single mistake can lead to the death of a business, owners have to act smart while taking major decisions, especially when that is going to have a long-run effect. When it comes to financing working capital, experts have always advised not to opt for long-term loans and borrowing to fund short-term assets.

Bank loans have always been a liability for any business and are supposed to be repaid after a stipulated time along with a certain amount of interest. Now, why would you add an extra debt to your balance sheet when you are already in a cash-crunch situation?

Accounts receivable financing is a smarter way of getting funds where in you use your unpaid receivables to get advances. But, why it is being preferred over traditional sources?

Companies like its flexible nature

There is no limit to the amount of invoices you want to get financed and you get money immediately. You can choose any invoice that you think will be sufficient to meet your current funding needs.

Instant Cash Flows

You don't have to wait for your customers to pay the receivables. As soon as you complete the order and raise your invoice, you can get it factored and inject funds when you need. No more waiting for slow paying clients.

No added Debts

You get advances against your sales ledger, hence no extra debt is added to your balance sheet. So no worries about monthly payments or interests.

Accommodates growing demands

As this is tied up to sales ledger, higher are your sales, higher is the amounts of advance you can avail. When your business and sales grow, your accounts receivables increases and this meets your growing funding requirements.

Need we say more? Invoice factoring company that deals with your invoices will manage receivables, takes care of collections and will also establish the creditworthiness of your customers to safeguard your business. You can also turn to their financial experts and professionals for any advise. A total win-win situation! No wonder why it has become the mainstream funding source now.

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