Why Does a Thriving Business Need Factoring Services?
Written by US Funding on October 9, 2015
A lot of people have a skewed vision of business. If someone hears that a store or company is doing really well, they probably automatically think about customers flocking in, things flying off the shelves, and the cash register and bank accounts quickly filling up. Or, they imagine the scenarios on a show like Shark Tank, where business owners make a pitch and suddenly people are falling all over themselves in order to provide funding. While both situations can and do happen, the truth is that generally things are quite a bit different. If a small business is doing well, there may still be little to no money on hand. How is this possible? It is actually pretty simple. A company that sells to other businesses usually takes big orders.
Then it needs to work hard to fill those orders. Okay, so far, so good. The company has a product somebody wants and they are asking for a lot of it. What is the problem with that? Well, in many cases, companies do not require payment right away. Depending on the agreements they have worked out, its customers may not have to pay for a while, sometimes several months. This puts the company in an odd situation.
Now they have to wait for payment before they can fulfill additional orders, pay vendors, and cover all other expenses. Suddenly, things have come to an abrupt stop. The company can only produce more if it gets paid, but it will not get paid if it does not produce more. What is the solution to getting out of this vicious cycle? Small business factoring.
Small business factoring is a great option for companies in this exact situation. The way it works is easy. All those invoices that need to be paid are sold to a factoring company. In exchange, the company gets immediate cash. The best part about small business factoring is that it is not a loan. This money never has to be paid back. Without having to wait for payment from its customers, the company gets money to keep production going.
On top of that, the company does not have to deal with the sometimes sticky proposition of reminding someone that payment is due. Since the factoring company now owns the invoices, it is completely their responsibility to collect payment from the customers. Another benefit of small business factoring is that credit does not play a role. It does not matter if a company has less-than-perfect credit. As long as its customers are good for the money they owe, that is the main consideration.
Even a business doing well can run into problems, such as late-paying customers. If your company falls into this category, small business factoring could be just the thing you are looking for. To find out more about small business factoring and to learn about how the process works, just get in touch with US Funding. We will help you get the money you need to keep your business running.