Wednesday, 13 November 2013

Unleashing Your Invoice’s Funding Ability

If you are a small business owner, then your company is consistently running up debt to fund its working capital requirements. Such debt may decrease your cash to debt ratio significantly until your business gains a profit by collecting on invoiced payments from customers. Current lending practices from banks have been declining continuously, making the situation tougher for micro businesses. To tide over this cash crunch situation, organizations can use factoring or invoice discounting services for immediate funding.

If your business is persistently facing the risk of low cash reserves, especially when you need to meet payroll and other expenses, then factoring would be an ideal option. This type of funding reduces dependability on banks, and provides instant working capital as and when needed. If more small businesses were aware of this alternative financing option, then they wouldn’t face the fate of closing their business doors due to a lack of financing.

Through invoice discounting, you can easily get funds ranging between $10,000 and $500,000 in 4 days, with an advance amount paid by the factoring company of up to 90% on an invoice. In addition to that, there are no set up fees or penalties except a discount fee (usually between 2.5% and 7.0%).

The list of the benefits for factoring does not end here. There are no long term contracts to bind you, and funding amounts are flexible as well as competitive.

Let’s see at a glance why invoice discounting could be an excellent funding option:

•    Consistent cash flow against a modest fee;
•    You need not follow up with your customers for payments;
•    You will get cash as an advance before your customers pay on invoice;
•    Your business won’t incur any debt for using factoring;
•    You will receive personalized services from the factoring company.

Factoring is increasingly turning into an alternate funding option for smaller organizations for its easy availability and uncomplicated processing. Regardless of your business’ financial condition and credit rating, invoice financing can help you to maintain a healthy cash flow by unlocking your invoices.

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