Factoring Frees Up Funds for Your Small Business
Written by moxysupport on June 4, 2015
Small business owners often run into cash flow challenges, and factoring can help get business owners through tight spots without incurring long-term or high-interest debt. Let’s take a look at some common scenarios and see how factoring works to free up funds so business owners can take advantage of opportunities that come their way.
A Small Food Manufacturing Firm Receives a Large Order
“Yummy Snack Cakes” received a large order from a regional grocery chain. With their goods previously distributed only in small specialty stores, this represents a “big break” for the small business.
Now it’s time to buy more ingredients, ramp up production and work around the clock to produce the food and print the packaging in order to fill this large order. But their newest customer is on a Net-90 cycle, which means YSC won’t see any money from this opportunity for another three months. How can the business make the investment it needs to grow, without available capital?
YSC can approach a factoring company and sell their latest invoice, along with any other outstanding invoices. The factoring company gives YSC the money upfront, minus a small fee. It’s now the factoring company’s responsibility to collect the invoices when they come due, and YSC can focus on what it does best – making Yummy Snack Cakes.
When growth opportunities come along, you don’t want to say “no” because of a lack of infrastructure. Factoring is a fast and easy way to gain a cash infusion without a lot of paperwork, stress, or high interest rates.
A Contractor Wins a Large Design/Build Bid
Every technology contractor in the region was vying to win the bid to design and install sophisticated alarm and monitoring systems in a new healthcare facility. For the winner, it represents the largest job his 8-person firm has ever completed.
The project requires a huge upfront investment in hardware, cabling, video screens and more, but the contractor’s credit is extended from other recently completed jobs. There’s no time to take out a loan, but he needs the parts to ship right away. Additionally, he may need to hire more labor to meet the fast turnaround times required.
Enter U.S. Funding, who will pay any outstanding invoices upfront, giving the contractor the capital he needs to complete the high-profile project on time and within the client’s budget.
How Can Factoring Help You?
The above scenarios represent just two situations where small businesses can benefit from invoice factoring. Factoring helps small business owners stay afloat by helping with monthly bills, rapid growth phases, and large projects requiring an infusion of capital before the invoices come due.
Best of all, U.S. Funding can help regardless of your business or personal credit. We don’t require a business plan, and we don’t run a credit check. If you’re overextended right now, but your invoices show cash flow in the near future, factoring could be the solution your company needs. We take on the risk so your company can enjoy the rewards.
Factoring can help you weather tough times to stay afloat, take advantage of new opportunities, or to enjoy a rapid growth phase, without worrying about how to pay your bills.