Invoice Factoring Can Bring Your Business Quick Cash
Small business owners often struggle with cash flow.
Their source of income isn't steady.
One week, the business is flush with extra dollars.
The next week, the coffers are bare.
But the utility company and landlord don't care: They want their money now.
Fortunately, there is a tool that business owners can use to quickly boost their cash flow: invoice factoring.
You may not be familiar with this tool, but businesses across the country use it as a type of financial safety net.
Basically, you sell your outstanding invoices at a discounted price to outside financing or factoring companies.
The transaction serves as a positive move for all parties.
You get a quick infusion of much-needed cash for your business.
You can use these extra funds to pay down your rent, purchase new equipment, give a raise to a deserving employee or simply stow away in your savings account.
At the same time, you place the burden of collecting on any invoices you send out to the factoring company.
Invoice factoring provides a benefit for the outside factoring companies, too.
Because they purchased your outstanding invoices at a discount, they'll make a profit - large or small, depending on the size of the discount - when they eventually collect on the outstanding invoice.
While invoice factoring can operate as a type of safety net for business owners who are struggling with their cash flow, it doesn't come without its own set of rules and regulations.
In general, the newer the outstanding invoice, the more money an outside factoring company will pay for it.
For instance, a factoring company will pay more dollars for an invoice that is only 10 days old than they would for one that is 20, 30 or 40 days old.
Most factoring companies also won't pay anything for an invoice that is 90 days or older.
If you want to make money off of such an invoice, you might have to send it to a collection agency.
When you're running a small business, you need every advantage you can get.
Investigating invoice factoring might be one more tool that you can use to keep your business alive during these tough economic times.
Their source of income isn't steady.
One week, the business is flush with extra dollars.
The next week, the coffers are bare.
But the utility company and landlord don't care: They want their money now.
Fortunately, there is a tool that business owners can use to quickly boost their cash flow: invoice factoring.
You may not be familiar with this tool, but businesses across the country use it as a type of financial safety net.
Basically, you sell your outstanding invoices at a discounted price to outside financing or factoring companies.
The transaction serves as a positive move for all parties.
You get a quick infusion of much-needed cash for your business.
You can use these extra funds to pay down your rent, purchase new equipment, give a raise to a deserving employee or simply stow away in your savings account.
At the same time, you place the burden of collecting on any invoices you send out to the factoring company.
Invoice factoring provides a benefit for the outside factoring companies, too.
Because they purchased your outstanding invoices at a discount, they'll make a profit - large or small, depending on the size of the discount - when they eventually collect on the outstanding invoice.
While invoice factoring can operate as a type of safety net for business owners who are struggling with their cash flow, it doesn't come without its own set of rules and regulations.
In general, the newer the outstanding invoice, the more money an outside factoring company will pay for it.
For instance, a factoring company will pay more dollars for an invoice that is only 10 days old than they would for one that is 20, 30 or 40 days old.
Most factoring companies also won't pay anything for an invoice that is 90 days or older.
If you want to make money off of such an invoice, you might have to send it to a collection agency.
When you're running a small business, you need every advantage you can get.
Investigating invoice factoring might be one more tool that you can use to keep your business alive during these tough economic times.
