Factoring: an alternative funding option
There are a wide variety of lending options available to your business and it may be overwhelming to determine the best course of action. From short-term to long-term, secured or unsecured, choosing the right funding option is essential to receiving the best terms and conditions to help your company thrive. One of the oldest forms of financing is factoring, which continues to be a compelling option for many business owners.
When you provide a product or service, you may not be paid right away. Most companies offer payment terms for their services, which may be for as little as 30 days or less or as many as 90 days. While offering payment terms is quite common, unpaid invoices can hurt your cash position and leave you in a financially challenging situation.
Factoring allows you to receive your payments quickly. Instead of waiting for collections on your receivables to arrive, you may work with Kinlow Advisors to be connected with a factor. If you are approved, you will generally receive funding for between 70% and 90% of your approved invoices and you will receive funding within a few days. Unlike with typical loan transactions, you won’t have to discuss how you’re using your cash nor will you have to deal with the risk of late payments. Use your money as you see fit. Your factor will then be responsible for receiving your customer payments as they are paid in the future.
Factoring provides you with cash now, but this funding option can also be preferred by many businesses because it does not involve a long-term commitment. Contracts are typically signed for each invoice, meaning you can stop factoring at any time and wait for cash due from customers on invoice amounts instead.
Because the factor will be receiving their payment from your customer, you are not required to provide a credit score or financial history. The factor reviews your customer’s credit score to determine whether that account is eligible. This solution thus allows you to secure the funding you need without having to wait to build your credit score.
Whether you need a little extra cash to meet your payment obligations or a large, unexpected bill needs to be paid immediately, factoring can be a competitive option for fast and flexible financing. Secure the liquidity you need to build your credit, improve your cash flow situation and expand your business without taking on additional debt.
Call today to discuss how factoring your receivables may be the best answer for your funding and cash flow needs.