5 Ways to Make Your Business More Profitable by Factoring Invoices

5 Ways to Make Your Business More Profitable by Factoring Invoices

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Few businesses can say they don’t want improved cash flow. From budget deficits to delinquent accounts, here are five signs your business might be more profitable by factoring invoices instead of waiting on customer payments.

Getting paid more quickly can help entrepreneurs, startups and small businesses in a big way by improving cash flow and supplying the cash-on-hand needed to grow.

Small businesses often dream of landing a big account but find that large corporations hold all the cards when it comes to setting terms, including pricing, profit margins and timing of invoice payment. Slow-paying customers make for fast cash flow drains that can hurt a small business, erode profits and even threaten viability.

The good news is that there is more than one way to improve cash flow. Factoring invoices can put the power back in your hands and give your organization the money it needs to become more profitable and grow more quickly over the short or the long term.

5 Signs a Business Should Consider Factoring Invoices to Become More Profitable

  1. Discouraged by Delayed Payments

By the time you make a sale, the math is already upside down. When you consider that you have incurred costs for marketing and advertising, manufacturing, shipping, supplies, transportation, payroll and all of the other costs of doing business, it’s easy to see why it would be discouraging to wait for customers to pay on time, let alone waiting on customer payments that are past due.

Analyzing 409 companies from Standard & Poor’s 500-stock index puts the average time to pay suppliers at 46.5 days, but also notes that small businesses wait even longer to get paid, two months on average. Delayed payments mean delayed reimbursements for the costs you’ve incurred as well as delayed reinvestment in order to grow your business.

When you factor invoices, you collect payment immediately. This empowers you to maintain more consistent cash flow and ensures that you will have money on hand to meet expenses.

  1. Dealing with Budget Deficits

When you are waiting for customers to pay, cash flow challenges can compound. If you make late payments, you may incur penalties that further erode your company’s profits. When you factor invoices, you gain immediate access to the money customers owe you. As a result, you can pay your creditors more quickly. Knowing that you will have the cash needed to pay can even give you leverage with suppliers that will enable you to save money by negotiating more favorable terms with vendors or allow you to take advantage of volume discounts. When you cut your costs and save money, you improve your profit margins!

  1. Desire to Limit Risk of Defaulting Customers

Slow-paying customer accounts are bad enough; but what happens when your customer can’t pay at all? Dealing with bad debt is one of the costs of doing business that can cut into your profit margins in a big, bad way.

Bad debt is a big problem. In 2010, US businesses placed $150 billion with collection agencies, who were only able to collect about $40 billion of that total (www.debtcollectionanswers.com). The SBA (Small Business Association) reports that only about 1/3 of all new businesses will still be around after 10 years. If a customer has filed for protection or gone out of business, even costly recovery efforts may prove fruitless.

Factoring invoices with a non-recourse factoring company is one way to protect your company – and your profit margins – from the negative impacts of bad debt. Non-recourse factors assume the credit risk for factored invoices, which can reduce or even eliminate your organization’s risk from bad debt.

  1. Looking for Competitive Advantages

Being able to improve profits and better manage cash flow can lead to additional perks that can help your business become even more profitable. Factoring invoices gives you access to the money locked down in customer receivables right away – without waiting for customers to pay. Since waiting on customer payments is no longer a problem, you can create a competitive advantage for your organization by extending more favorable terms to your customers.

  1. Pursuing Bigger Opportunities

Since factoring invoices allows you to reinvest in your business more quickly, you can also grow more quickly. Whether you want to take on more work simultaneously, pursue bigger projects or land bigger fish, factoring gives you the ability to put more capital to work to promote and market your business, to expand, or to pay for supplies and the up-front costs needed to serve larger accounts or take on more jobs at the same time.

Request a free, no-obligation quote and expedite cash flow by factoring invoices instead of waiting on customer payments. Contact us at 855-882-6772, speed up the process by applying online or email us using the short form below.

  • Average monthly sales or amount of invoice to factor
business growth signs

7 Signs Point to a Real Need for Business Growth

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Complacency is a trickster; don’t fall for it. These seven signs clearly indicate that now is the right time for business growth.

The Time is Right – 7 Indications that Business Growth Should Be Your Top Priority

Complacency is a trickster. Not only does it creep up on us unawares, it also creates blind spots, leaving us open to missing opportunities or warning signs. If one or more of these seven clear signs that point to the need for growth apply to your organization, it might be time to prioritize marketing and operational strategies that can help you grow your business.

7 Characteristics of a Business Needs to Grow to the Next Level

  1. Benchmarks hit – or missed.

It is said that Alexander the Great wept simply because he believed there were no new worlds to conquer. If you have hit the goals you set for your business, it’s time to set new ones. Conversely, if you have missed goals and benchmarks that you anticipated reaching by this point, it could well be that your business needs to grow to meet them.

  1. Cash flow challenges. It’s common for a business to experience cash flow challenges from time to time; however, if your business has a track record of coming up short when it comes time to meet operating expenses or payroll, or you do not have the money you need to expand – or even replenish – inventory, then it is very likely that your business needs to grow in order to enjoy more stability and sustainability.

At Corsa Finance, solving business cash flow challenges is our specialty. Clients use our invoice factoring services to speed up cash flow in order to more easily:

  • Meet operating expenses and payroll
  • Finance business purchases, repairs, and renovations
  • Cover unexpected expenses
  • Maintain cash flow during cyclical or seasonal lulls
  • Replenish or expand inventory
  • Add new products or services
  • Expand by adding location square footage or opening up new locations
  • Execute strategic marketing campaigns or pay for new marketing tools
  • Hire temporary staff seasonally or while growing
  1. Employees are stretched too thin – or becoming bored.

One sure sign that you need to grow your business (so you can hire more employees) is when you and one or more of your staff are stretched too thin, wearing too many hats, or juggling too many responsibilities – often with the result that tasks aren’t getting done on time or they fall completely through the cracks.

On the other hand, employees who are bored, disengaged, or disinterested may be telling you that it’s time to grow your business. Adding new projects and challenges to employees’ jobs may be just the thing to keep them interested and engaged with your business.

  1. There’s new technology on the horizon.

Your business may need to grow in order to keep pace with technology advances in your industry; conversely, the emergence of new technology may be providing you with new ways to grow your business.

  1. Customers losing interest or shopping around.

If customers believe that they know all there is to know about your business or have experienced all the benefits your products and services offer, they may begin to lose interest or shop around to see whether competitors may have something more to offer.

Keep customers interested by growing your business (expanding or changing your product or service lineups) and engaging in marketing campaigns that create intrigue, incentivize loyalty, or stimulate word-of-mouth marketing.

  1. Your industry is evolving.

Technology is not the only industry innovator that may make it desirable for your business to grow. Finding more efficient ways to do business, new ways to promote a business, or identifying new target markets can all mean that it’s time for your business to grow beyond its old boundaries.

  1. Competitors are gaining ground.

Whether in the form of direct competition or indirect competition (e.g., there are substitutes or alternatives to your business or its products or services), when competitors begin to eat away at market share, it’s a sure sign that your business needs to grow and evolve, as well.

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Do you need improved cash flow for business growth?

Here are four things that must be part of your plan for business growth:

  • Clear vision, understandable, well-defined mission, and a strategic marketing plan
  • The right people on your team
  • A plan for how infrastructure will evolve with business growth
  • Working capital and business financing tools

We provide receivables invoice factoring services that can be used for business growth and sustainability.  We would be happy to help you determine if factoring can help your business or provide you with a no-risk, free proposal for business financing that could take you from approval to funding in a few days – or even faster.