Wednesday, 13 November 2013

Selling Invoices to Generate Funds for Your Business

Today’s small businesses often run into financial turmoil, and some take the extreme decision of declaring bankruptcy without knowing the best solution that they could have undertaken. On the other hand, some businesses that are profitable face severe cash crunches due to the lack of cash, which is essential for survival and sustenance. It happens when a business grows, its customer base expands, and their payment terms get extended. In the business world, payment terms of 15, 30, 45, and 60 days are an accepted norm. Though, delayed payments from customers takes its toll on the cash flow of a business as meeting regular expenses become an uphill task. In order to have a permanent solution to this funding woe, small businesses can use invoice factoring services for alternate financing.

You need not take the risk of waiting 15-60 days for payment when you can have immediate access to working capital. Seeking services of a factoring company for instant funding may lead your business to a viable financial resource in the long run. Factoring can provide multiple benefits with consistent cash flow. For example, by quickly turning your invoices into a source of cash reserve, you will always have enough working capital to continue with production, update inventory, and incur the essential operational expenses. Eventually, your company’s efficiency and profitability will increase.

Receiving funds through invoice discounting can provide your organization unlimited opportunities to give your business endeavors the right direction. Your ability to control cash flow will provide you great flexibility to strategize your business’ progression the way you want. Also, by selling your invoices, you won’t be incurring any additional liability for your business. Even companies burdened with heavy tax liability can obtain invoice factoring and can clear up all of their tax obligations. So, unlike banks that only consider tangible assets such as property, inventory, machinery etc. for lending purposes, you can use your invoices as assets by selling them through a factoring service.  You can sell invoices at a discounted rate, which is typically between 2.5% and 7.0%. You will receive an advance amount between 40% and 90% of the invoice value and put it to immediate use for incurring your required expenses.


  1. I've been trying to learn as much as possible about small business factoring and different companies that help with it. Any advice is appreciated.

  2. If traditional financing isn’t possible (or something you do not want to incur), consider accounts receivable invoices to create cash flow. It’s a simple process, often used as a temporary financing solution by many businesses, to provide immediate cash until they can turn their balance sheets around.