Struggling with cash flow? You’re not alone. It’s a common enough situation for small businesses across the US. It’s not limited to new companies, either. Established firms, even larger companies, can face cash flow shortages. Factoring might be the answer to your financial challenges. How does it work and what should decision makers know?
Factoring is nothing more than selling your accounts receivable invoices to a factor in exchange for cash up front. If your clients usually pay in 30, 60, or 90 days from the point of purchase, this arrangement allows you to get a percentage of that money now, often up to 90%, and the remaining balance less a fee once they pay. The arrangement allows you to increase cash flow and meet your needs.
Is It Affordable?
Factors charge a fee for their services. However, that fee can vary from one company to another. You may also find that factors unfamiliar with the specifics of your industry may assess higher fees due to that lack of familiarity. Working with a specialist is usually best for companies in the logistics industry, construction, and even the healthcare sector.
What Benefits Does It Offer?
There are several important benefits to be gained by working with a factor. One of those is obvious – improved cash flow. However, there are numerous others. For instance, the factor handles billing and collections, which saves your company time and money. It also makes expansion simpler and easier and ensures that you’re able to meet mission-critical requirements.
Tips for Choosing a Factor
A lot rides on your choice of factor. Make sure the company has significant experience factoring within your industry or niche. Also, verify the fee assessed per invoice.
If you’re ready to build a stronger, more stable business, contact Commercial Capital Partners today.