Small businesses made up 99.7% of the total number of businesses operating in the United States. These businesses cropped up so fast and provided hundreds of thousands of jobs. However, many of them die out as fast as they’ve grown because of cash flow problems.
Financial solutions to problems may seem numerous, but in reality, options for small business are so limited that financial partners have cropped up to provide alternative options and save economies from their impending demise.
Options like invoice factoring are made available by debtors to facilitate cash flow and business growth, especially for small businesses with limited financing options. Tagged as the “ideal funding solution” by Wayne Thomason, Chairman of the Debtor and Invoice Finance Association of Australia and New Zealand (DIFA), it offers immediate funding to legitimate businesses without adding debts via unpaid invoices.
Invoice factoring can make or break growing companies. As Thomason has said, spending money is necessary to grow a business. For small businesses, the benefits of a quick access to cash without adding debts can be everything. Here are some of them:
- Less is more.
Getting funding can be taxing. It is not always simple. Bank loans require tons of paperworks and years of established operation. Even after you have all the requirements, chances of approval rate is low and interest rates are high. With invoice factoring, however, the only requirements are the business and invoice verification and a solid clientele with good credit standing.
Approval can be done within 24 to 48 hours, which means the cash can be accessed faster. This allows businesses to grab more opportunities in less time.
Factoring also means less stress and more opportunity to manage and organize business ventures. Factoring companies usually offer professional management of receivables which means less time and lower in-house business expenses. At the same time, you can enjoy enjoying fast turnaround time on the company’s receivables.
- It is painless.
Owning and managing a business can be very painful. With invoice financing, entrepreneurs feel less pain caused by the stress of managing cash flow. The fast turnover of cash stops you from worrying about whether or not the company can handle expansion when the time comes. It also frees up worries from damaged credit and late fees on critical business expenses because cash can be made available with fixed factoring schedule.
- It is a win-win solution.
In 2017, a lot of businesses reported upward trends in sales. With invoice factoring, these upward trends can also happen to small businesses. Not only does it help maintain a liability-free balance sheet, but it also translates to additional cash without the weight of debt. As Thomason has said, cash from factoring comes from goods sold in certain terms. You can cash out on these invoices earlier at a minimum discount.