how to improve cash flow with factoring

How to Improve Cash Flow with Factoring

Despite its long history, invoice factoring remains a lesser-known financing option among many small business owners in the U.S., especially those in the B2B sector. This age-old method, also known as invoice discounting or receivables financing, offers a practical solution for managing cash flow and fostering growth.

What Is Invoice Factoring?

At its core, invoice factoring is straightforward: businesses sell their accounts receivable (i.e., outstanding invoices) to a third party, the Factor, at a discounted rate. This transaction not only simplifies financial management but also turns pending payments into immediate working capital.

Why Consider Invoice Factoring with Corsa Finance?

  1. Immediate Access to Working Capital: Factoring your invoices means unlocking up to 95% of the funds tied in accounts receivable, often within the same or the next business day. This swift access to cash supports essential operations, from payroll to new orders, without the wait.
  2. No Hidden Fees, Flexible Options: Transparent pricing at competitive rates makes factoring attractive to many businesses. The transaction is easy to understand and process.
  3. Expertise Across Industries: With decades of experience, our partners supports a diverse range of sectors, including temporary staffing, supply chain management, trucking, commercial cleaning, manufacturing, and more. Invoice factoring works successfully for businesses of all sizes and types, ensuring your specific needs are met.
  4. Personalized, Customer-Centric Service: Our partners offer fast approvals and funding without long-term contracts or minimums. Our dedication to personal service ensures you receive the support and guidance needed to navigate your financing options effectively.

How Does Factoring Benefit Your Business?

By choosing to factor invoices, you not only expedite your cash flow but also open doors to new opportunities. This financial strategy allows you to:

  • Immediately reinvest in your business, stimulating growth and expansion.
  • Manage payments and operational expenses more effectively, ensuring stability.
  • Embrace larger projects and orders with confidence, knowing your financial base is solid.
  • Reduce accounts receivable collection activities so you can focus on growing your business.
  • Take advantage of early-pay price discounts.
  • Access working capital without putting more debt on your balance sheet, keeping your bank covenants intact.
  • Keep your vendors, contractors, and creditors happy with on-time payments.

Get Started Today

Ready to explore how invoice factoring can transform your business finances? Contact Corsa Finance for a no-cost, no-obligation quote. Discover the amount of working capital you can unlock by leveraging your accounts receivable. Whether you’re seeking to understand more about our services or ready to apply, we want to be a financial resource for you.

Empower your business with invoice factoring and turn your accounts receivable into a strategic asset that is working for you today. Contact us today to learn more or to start the application process.

white block letters on red background stating "late payment"

Don’t Let Late Payments Hurt Your Business

Take control of your cash flow so that customers’ late payments don’t have the ability to slow or stall your business.

Is money stuck in your accounts receivable due to late payments slowing down your business?

Finance news site reports that on any given day in the US, B2B companies are sitting on as much as $3.1T (yes, TRILLION!) in accounts receivables. Larger companies have two advantages when it comes to slow-paying customers than their SMB (small and mid-size business) competitors do.

Amount tied up in unpaid customer invoices every day

  1. Relationship Power

Big companies are often the “power” player in the relationship, in the position of dictating payment terms to their customers. Conversely, SMB’s may have to play by the rules of their customers and may not feel as though they want to risk damaging a relationship by hounding a customer for payment.

  1. Financial Power

Large companies generally have deeper financial reserves than their smaller counterparts. Late payments from customers can make it difficult for small and mid-sized businesses to make payroll or meet other financial obligations, such as taxes, lease and mortgage payments, operating expenses, marketing and advertising, taking on new customers or bigger accounts, and so on.

SMBs with late payments also pay their own suppliers late

In fact, a PYMNTS study found that 28 percent of businesses impacted by late payments from their customers also then end up paying their own suppliers late.

Are you running your business or is slow cash flow calling the shots?

An article lists signs that indicate slow cash flow is stalling or stopping business growth and operations, ultimately resulting in a lack of liquidity – insufficient on-hand working capital needed to meet payroll, expenses, and other operational costs. Two of these symptoms go directly to the heart of outstanding customer invoices:

  • Late payments – overdue invoices
  • Slow collections

When money isn’t coming in as scheduled because of late payments from customers, your ability to meet payroll and cover your own business expenses is hampered. Even if you are scraping by on expenses, you may be unable to take action to grow your business, such as taking on bigger accounts or new customers while you are waiting for customers to submit payments on jobs you have already completed.

If your business struggles – occasionally or frequently – to meet expenses or lacks working capital needed to grow, slow cash flow is negatively impacting your operations and limiting your control. You can take control of your cash flow by expediting cash flow, whether or not you eliminate the challenge of slow-paying customers.

4 Ways to Speed Up Slow B2B Cash Flow Caused by Late Payments

1. Factor invoices

You can completely eliminate the challenge of late payments by customers by factoring invoices as soon as the first day they are created by factoring them with Corsa Finance. Factoring also benefits your customers in that they can still enjoy generous payment terms and can further protect your company from risk of bad debt if you choose non-recourse factoring.

2. Offer fast-pay discounts

You probably have vendors that offer quick-pay or cash discounts, giving you a price break or account credit if you pay immediately instead of on terms. One thing to consider before offering a quick-pay discount like this to your customers is whether the discount you’re offering would be more than the cost to factor the invoice. If your factoring fee would be lower than the amount you give back in a discount, then factoring could be the smarter financial choice. Your business still gets paid right away, and you aren’t leaving as much money on the table.

3. Require large deposits

One of the consequences of invoicing customers on terms after a job has been completed is that your business is often required to pay for supplies, equipment, employees, and other expenses long before the revenue attached to that job has been received. If customers are required to put down a deposit, some of that revenue can be matched up to corresponding expenses. However, this doesn’t completely eliminate the issue of the balance of the invoice coming in slowly or late.

4. Invoice in real-time

Use technology to generate invoices in real-time as soon as a customer has signed off on a job or one of your employees has indicated its completion. Waiting a day or even a few days to invoice customers means days in addition to the length of their payment terms before revenue will come in.

What would you be able to pay for today if you weren’t waiting on customer payments or commissions owed to you?

  • Federal or state taxes
  • Taking on new clients or bigger accounts
  • Business credit card or loan payments
  • Marketing, advertising, and other promotions
  • Automobile repairs, gas, or maintenance
  • Lease, rent, or desk fees
  • Employee or contractor wages
  • Supplies and expenses

Submit an inquiry using the form below to find out how we can help you take control of your cash flow to keep your business on a better financial footing.