How Can a Factoring Company Help You Reach the Next Stage of Growth?
Written by moxysupport on May 13, 2015
Manufacturing is expensive, and it can be hard to manage cash flow during phases of rapid growth. Fortunately, as a multi-million dollar manufacturing firm, you have multiple options to raise capital. Let’s look at the benefits of using a factoring company for growth capital versus some of the other options.
The Problem with Using Investor’s Funds
Some large manufacturing firms explore venture capital or angel investors for a large cash infusion. While a company with a proven product and lean manufacturing processes, which can show a profit for several years and has already achieved several million in revenue, should be able to find investors, it may not be the best option.
First, there’s a lot to prove when you use a VC firm. You’ll need to account for every penny spent, past and present. Additionally, finding VCs willing to invest requires networking. Experts have said raising capital should be treated as a full-time job – and that’s on top of your already full-time job of running a large company. Even if you’ve already grown well past the start-up stage, isn’t your time better spent on R&D and process improvements to build even better products and an even more profitable company?
Additionally, as soon as you bring investors into your company, whether through an IPO, angel investors or a VC firm, you release some of your control. Other people, whether stockholders or investors, now have a say in how you run your company.
Sometimes, other people’s insight can be invaluable, but if you’ve already grown your business to the multi-million dollar mark, you’re perfectly capable of deciding what’s best for your company.
Although you may rely on business coaches, consultants, or even a team of colleagues or a mastermind group for advice, input and that “eagle’s eye view” that you don’t have by being on the inside, if you want to ultimately retain complete control of your company, you may not want to bring in outside investors. A factoring company can give you the funds you need with no strings attached, other than a service fee.
Benefits of a Factoring Company for Growth Capital
When you borrow funds from a factoring company, the money you’re spending is your own – it’s just not in your pockets yet. You can borrow against future accounts receivable before they are due, giving you the money you need to invest in raw materials, equipment or personnel to accommodate growth. The factoring company won’t tell you how to run your business, only provide the money to do so.
Additionally, rather than investing an additional 40 hours a week or more in fundraising, borrowing from a factoring company takes very little time, and it’s something your bookkeeper can accomplish.
You’ll need to provide your accounts receivable to the factoring company. The factoring company gives you the money, minus a fee. Then, when the receivables come due, the factoring company collects the money while you focus on your business. It’s as easy as that.
As a large business, you have many options for raising capital. Why not consider a factoring company to give you the cash infusion you need for your next stage of growth?