As businesses grow, they often find themselves needing additional financing for expansion, meeting payroll, marketing, or to cover other expenses. Sometimes, corporations are financially strong enough to obtain a bank loan as a means of increasing credit. Other times, however, less traditional means of financing are necessary. For certain companies, traditional bank loans do not make sense. Especially business owners that are looking for funding as-needed or do not want to add more debt to their balance sheet. Banks offer little leverage to meet the additional borrowing needs and can possibly even hurt more than it helps.
Invoice factoring is a financing solution that helps companies stabilize cash flow by unlocking the cash sitting in unpaid receivables. Also known as receivable factoring , this process involves treating invoices as collateral, which are sold to factoring companies. Your company then receives the cash in advance with each invoice sold. The amount of capital available grows with your business. As long as you have invoices to factor, funding is available!
Bank Loan VS Invoice Factoring
Working with a bank is a solid option for many business owners, but the lending market remains tight. If you’re lucky enough to be approved, the loan amount may not be enough to meet your financial requirements. Plus, you’ll have debt to repay.
Benefits of Invoice Factoring
Factoring companies offer funding for businesses of all sizes and stages. From start-ups to long-established companies, invoice factoring is a smart solution to combat cash flow crunches without taking on additional debt.