Invoice Factoring and Keeping Facts Straight

There have been a lot of misconceptions regarding inverse factoring and we should keep facts straight so that business won’t get tied up and loose the chance to derive its benefits.

invoice factoring business growthTo refresh your ideas a little bit, here is a brief list of benefits and advantages of having invoice factoring as a means to raise funds and capital.

  1. It’s easy and simple without any overburden regarding requirements for application.
  2. It hastens very long receivables providing better cash flows.
  3. Funds can be available in as fast as twenty four hours making it a good solution for emergency expenditures.
  4. Reduction in bad debts expense and avoidance of doubtful accounts happen since the risks of non-payment are shouldered by the factor in a non-recourse type.
  5. Invoice factoring prevents the increase in liabilities since it does not involve any kind of interest whatsoever.

With that established, let us take a look at the common misconceptions for us to break the walls of misinformation.

  1. It is expensive. It isn’t. In fact, it can save your company’s financial resources. Take spot or single factoring for example. The only fees you’d have to pay for are for that specific invoice. It’s a onetime deal and it won’t involve compounding interests.
  2. It greatly decreases the value of your receivables. This is definitely untrue. Actually, some financial factoring institutions can advance up to 95% of the value of your invoice.
  3. It is only for financially distressed businesses and those who are suffering from constant losses. Do know that although many financially distressed businesses make use of it, there too are a lot of large and established companies who use it for its benefits.
  4. It can upset your customers. Not necessarily. If you do your homework well and deal with the best service providers or even get a confidential arrangement then there is no reason for your clients to feel uneasy. In a confidential arrangement, your customers will not even know that you have subjected an invoice to factoring.
  5. It requires you to have exceptional receivables management. Although having one is always preferable you do not have to worry if you are in fact having trouble with it. There are invoice factoring firms or institutions that offer additional services like receivables management, customer credit screening and the like.

Now that we’ve cleared things up, it’s now time for you to take advantage of the benefits of single invoice factoring here.

 

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