Apart from the factoring industry being an ancient and proven means of finance, there are many other reasons why it can be an effective activity for your business. An activity which doesn’t entangle you in a lot of red tape.
You are a “start-up”
Factoring is ideal for a start-up, you may not have significant assets as yet or not even have a full set of financials to convince the traditional lender of your viability. A Factor doesn’t need to see bricks and mortar or other such equity, they base their decision on the viability of your customers and the value of your invoices.
Remain in control of your business
No venture capitalist taking a percentage of your company or your profits. No bank telling you what you should be doing in order to qualify for a loan. A Factor buys your invoices and gets on with its job and leaves you to do your job. In effect a Factor assists you to do your job as they play an outsourcing role. The Factor also will not tell how you should spend the money you have raised by selling your invoices.
Continuous cash flow
As soon as you have your invoices you can sell them to a Factor, either ad-hoc or a monthly basis or however it suits your business operations. This ensures a steady flow of cash for the business to meet your ongoing expenses, buy new equipment and support your growth.
Cash without the debt
Factoring is not a loan, your business does not go into debt so no monthly repayments have to be met along with all the other ongoing expenses. You sell your invoices for a percentage of their value, which can vary according to the provider but it is commonly around 80%. Cash in a quick turnaround and your balance sheet does not show a debt for this facility.
No wrestling with the bank
Trying to get a loan from a bank is like an arm wrestle, all that red tape and paperwork which takes time and effort to produce. If you haven’t been in business for more than two years you probably wouldn’t even try to qualify. Save your energy for a less stressful process.
The growth “factor”
Having cash available on a regular basis enables you to plan ahead as and when the opportunities present themselves. As you can spend your funds the way you choose, there isn’t anything to stop you from taking the chance to grow and prosper.
Enhance your credit rating
A steady cash flow also means you are able to pay your creditors on their terms, hopefully favourable terms because you do in full and on time. This is great for your credit rating and if the need arises to get a loan, your credit rating will be in your favour.
Outsource accounts receivable
While a Factor is not a debt collector they do take over some of the accounts receivable responsibilities such as maintaining the payment history of customers and supplying regular management reports on collections. This also gives you great information on the creditworthiness of your customers.
All good reasons to take the step and contact Cashflow Debtor Finance.