If your small business invoices its customers using accounts receivable invoices, invoice factoring benefits could help you turn your small business into a big player – in nearly any B2B industry in the US.
Competitive Advantages Among Invoice Factoring Benefits for Small Businesses
Often, a small business can provide a higher, more personalized level of service to its customers than its larger competitors; but this does not always translate into a true competitive advantage for one simple reason: bigger organizations have access to more working capital.
While a small business may be waiting for customers to pay or resources to be freed up, larger competitors already have the money needed to invest in the next project, shipment or production run as well as spare resources at the ready to carry them out.
When it comes to cash flow, why play the waiting game?
By factoring invoices instead of chasing customer payments, a small business can gain access to the working capital tied up in open receivables, without waiting for customers to pay. This could give your small business or startup the edge needed to compete with large rivals in order to take on new orders more quickly, fulfill larger orders or serve larger customer accounts.
6 Invoice Factoring Benefits for Small Business
1. Reducing Overhead and Expenses
Your invoice factoring company can handle your receivables from beginning to end if that’s what works best for you. Your organization reaps the savings in overhead for the time, money and personnel that would be needed to first generate invoices then the time and energy to track and receive payments.
2. Eliminating or Reducing Bad Debt Risk
Many factoring companies provide clients with access to commercial credit checks on both new and existing clients. This gives you, the business owner, added peace of mind in trusting that you will be paid for the goods and services delivered by your company. You can vet new customers for credit worthiness and periodically reassess customer limits.
Working with a non-recourse factoring company gives your small business additional financial protection. When you use non-recourse factoring, the factoring company assumes the credit risk for the invoices we factor. If one of your customers can’t pay their invoice for credit-related reasons, the factoring company absorbs the loss, not your business.
3. Giving You Leverage with Suppliers and Vendors
Having working capital in hand (instead of only on the books) provides you with leverage you can use to negotiate better terms, including cash discounts or volume discounts with your own suppliers and vendors.
4. Improving your Credit Rating
Since factoring invoices gives you more predictable, steady cash flow, you can pay your bills on time or pay down debt more quickly, which can help to improve your business credit score and may help you improve your personal credit score as well.
5. Reducing Unnecessary Expenses
If you are forced to wait for customers to pay invoices before you can pay your own bills or creditors, you may also incur late fees and additional interest charges. Factoring invoices so that you have the money needed to pay your bills, loan payments and other expenses on time means that you won’t incur unnecessary late fees and interest.
6. Giving You Access to More Business Growth Resources
Our goal is to help you grow your organization from where it is today to where you want it to be tomorrow. From your account manager to the business resources and articles you’ll find on our website and blog, we continually work to provide our clients with more resources they can use to grow.
Bring invoice factoring benefits to your small business.
Get a free, no-obligation quote – you could go from approval to your first funding in hours.