Is Factoring Right for Your Small Business?
Written by moxysupport on June 23, 2015
If your small business is thriving, then obviously you are doing things right. Whether it has taken a long time to get to this point, or you have been fortunate that your new company has suddenly taken off, you have surely worked hard to get where you are. You are obviously supplying a product or service that is in demand and meeting the needs of your customers. However, there can be a little bit of a downside to running a successful business.
When you have a lot of customers and are constantly selling, unless everyone pays what they owe immediately for everything (which can be pretty rare), there is a real possibility that you could run out of the money you have on hand.
If this happens, you will not be able to produce more products or pay your employees and production will most likely grind to a halt. You may be wondering how this could happen to a successful business, but the truth is that it is quite common. However, the good news is that there is a solution for this: small business factoring.
What is Factoring?
Factoring is a process by which you sell your open accounts to a factoring company so that you can get the money you need for any expenses. The main purpose of factoring is that you do not have to wait to receive payment from your customers.
The Benefits of Small Business Factoring
Factoring can offer numerous benefits for your small business, including:
On average, how long does it take for you customers to pay you? Several weeks? Maybe even a few months? With factoring, you can get cash very fast, sometimes in just a day. The payments you need to make can then be taken care of almost immediately. This is especially important if payday is approaching and you are worried you will not be able to cover all of the payroll expenses.
Does your business owe money to banks or other lending institutions? Because factoring allows you to get money quickly, you will be able to pay back loans much faster or avoid having to borrow extra funds. The banks will be happy, and this is also a great incentive for future investors. It also results in a better credit rating for your business, which could lead to better terms from suppliers—an additional way to improve profits and decrease cash expenditures.
Even if your business is doing really well, it is possible that you may still have trouble getting a loan. If you are looking to expand or just want to put more money into the company, factoring is a great choice.
If you ever get into a situation where your business is just humming along nicely but you find that your cash flow is lagging, think about factoring. At US Funding, we have been providing factoring services to small businesses in the Triad area for over 15 years. We will work with you to come up with your best options and make sure you get exactly what you need to keep your business running smoothly.