Beyond Factoring: Added Advantages of Factoring Companies
When business leaders think of invoice factoring, the core benefits come to mind, such as instant payment on your B2B invoices and a fast, easy approval process. While these are undoubtedly big draws to the funding solution, there are many advantages of factoring companies beyond this. We’ll explore a few of the lesser-known advantages below.
Comprehensive Financial Solutions Beyond Invoice Factoring
When it comes to factoring, not all companies are created equal. Experienced factors like Viva Capital take a holistic approach to supporting healthy finances for the businesses they serve. This expertise ensures that you’ll have access to traditional factoring services and additional support that provide a strong foundation for your business’s growth.
Credit Management and Risk Assessment Services
One of the key aspects of invoice factoring is customer credit checks. These checks, conducted by your factoring company at the onset of your agreement, explore the creditworthiness of any client with invoices you’d like to factor. They provide valuable insights into the client’s ability to repay in a timely manner. For instance, you may discover that one client can reliably pay $10,000 in outstanding invoices at a time, while another can manage a $50,000 trade credit limit. By adhering to the guidelines provided after these credit checks, your business can reduce the risk of bad debt and receive faster payments.
Access to Alternative Business Funding Solutions
Factoring isn’t always the best funding solution. Experienced factors like Viva understand this and offer various funding options to ensure your business has access to capital in a way that aligns with your needs and growth stage. A few examples of alternate funding solutions provided by Viva include:
Reduced Reliance on Debt
Managing debt has always been a challenge for small businesses. However, struggles have been mounting in recent years. More than a third say that making debt payments is a financial challenge, per the latest Small Business Credit Survey . Over half say higher interest rates are contributing to increased debt costs.
Factoring doesn’t create debt. Instead, balances clear as your clients pay their invoices. Because of this, your business is less reliant on debt instruments and less impacted by interest rate hikes.
Enhancing Cash Flow and Working Capital
Seven in ten small business owners have concerns that their cash flow is insufficient to cover expenses, per Ocrolus research. Roughly the same say they have less than four months of cash to cover operating costs. Factoring helps with these concerns.
Strategies for Efficient Cash Flow Management
One key advantage of factoring companies is that they support efficient cash flow management. Cash inflow becomes more predictable, making it easier to time outflows and make informed decisions about how and when to spend.
Access to Immediate Working Capital for Growth
If you’ve ever had to turn down a new client or large order because you don’t have the working capital to manage the initial costs, you’re not alone. Although it’s rarely discussed, this is a common issue that can significantly hinder small business growth.
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Factoring is flexible, so you can tap into it as needed to seize opportunities as they arise. That includes scenarios like the one above or if you want to apply the funds to marketing, expanding into new markets, or adding new products or services.
Building Stronger Business Relationships
In the business world, nothing shows you appreciate and value your relationships more than handling finances with care. Factoring supports this in several ways.
Facilitating Better Client and Supplier Relationships
Factoring can help eliminate financial pressure from your client relationships. For instance, if your client needs longer terms, you can offer it to them without having to wait on payment. Your factoring company also collects balances for you. This is done professionally and respectfully and often involves making it easier for your clients to pay through digital systems to boost client satisfaction.
Supplier relationships often get a boost when you’re factoring, too. This is because it puts you in a better position to make timely payments, which reduces financial strain. Many businesses are also able to pay early or order in bulk to qualify for supplier discounts as well.
Leveraging Expertise for Negotiation and Networking
Established factoring companies often have business ties or industry-specific contacts that can help support your growth. Whether you need insurance, supplies, or equipment, check with your factoring company first. They can often put you in touch with someone who can help.
Tailored Services for Diverse Industries
Sometimes, factors specialize in specific industries. For instance, Viva can help most businesses with B2B invoices but specializes in a handful of industries, such as transportation, construction, oilfield services, and manufacturing. This improves your overall experience and can benefit your business in many different ways.
Industry-Specific Factoring Services
Each industry has unique needs. For instance, traditional factoring isn’t always the best fit in the construction industry because the general contractor usually takes the cash and then disburses it to specific subcontractors. Viva offers something called Construction Quick Pay . It allows the general contractor to advance payment to specific subcontractors for particular projects to ensure projects proceed smoothly.
Customized Solutions for Unique Business Needs
In addition to industry-specific factoring services, some factors provide unique benefits or perks. For instance, fuel is one of the most significant expenses for trucking companies. The costs add up and can sometimes determine whether the business can accept a load. Viva offers fuel cards and fuel advances to eliminate this concern and help trucking businesses save thousands annually.
Experience the Advantages of Factoring Companies for Yourself
The best way to get to know the advantages of factoring companies is to speak with a factoring specialist and find out what unique solutions and benefits are available to businesses like yours. To take the next step, request a free quote .
Original Article: Beyond Factoring: Added Advantages of Factoring Companies
Co- Founder at Oscar Capital Funding. Helping business owners in the US get business funding including Term Loan, Line of Credit, real estate financing etc.
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