If you are a small business owner with a steady and moderate growing business, you are already way ahead of the game. Maybe you have just recently had the chance to expand or take on a new client that will completely change the game for you and propel you into the big leagues, but unfortunately, there are stipulations that you can’t meet. For instance, say that the new customer or the new expansion is going to eat up your profits for 3 months, leaving you hanging in the wind. How can you take advantage of this opportunity, while still being able to survive the next few months?
Invoice factoring is a great way that you can take advantage of this opportunity, and this is just one of the many ways that it can help grow your business.
Helps Manage Cash Flow Dips
When it comes to growing your business, managing your day-to-day finances can make all the difference in the world. In fact, steady cash flow is often times one of the biggest problems that small and medium sized businesses face.
If you are dependent on cash coming in everyday cash dips can be extremely detrimental to the growth of your business. This is especially true if you have to wait 30, 60, or 90 days before your customer make their payments. Fortunately, with invoice factoring this is something that you won’t have to worry about, because you get the money for your customers’ debt right away.
Let You Take Advantage Of Current Opportunities
One of the great things about invoice factoring is that it isn’t just there to help manage cash flow dips. It can actually provide any business with the ability to take advantage of opportunities that are right in front of them. For instance, say that you are bringing in $50,000 a month, but you have the opportunity to take on a new customer that would almost double your revenue monthly. Unfortunately, taking on this new customer would burn 3 months of your revenue and leave you short on cash for payroll and other jobs. This is an opportunity that you would be able to take advantage of right away.
The most common ways to structure invoice financing is by discounting or factoring. Either can help you take advantage of current opportunities.
No Long-Term Contracts
Unlike business loans, invoice factoring does not come with long-term contracts. In fact, invoice factoring involves selling your invoices at a discount. This allows you to receive a large portion of the money owed to you almost instantly. For business owners struggling financially, this is a great option, as it allows for quick and easy access to funding. This could be the determining factor of whether you can keep your doors open or to shutter them.
You Are Still In Control
Just because you choose invoice factoring does not mean you are no longer in control of your business. This is a huge misconception that can deter some business owners from partaking in this practice. From the number and types of invoices you sell to the company you choose to sell them to, the option is all yours. You will continue to be in charge of your business’ day-to-day operations, employees and business decisions.
In fact, this low-risk cash management solution allows participants to concentrate on growing and managing their business. You will also never miss out on a new opportunity, just because one of your customers is slow at making payment.