|
||
Should you use invoice factoring?
For example some clients can take 30 to 90 days to pay their invoices. This causes strain on your company and unless you have reliable funds in the bank, paying suppliers and employees on time can be tough. Businesses and companies who have come across this problem have a couple options. The business can get a bank loan or line of credit. Unfortunately those loans are tough to qualify for and very hard to obtain. The better alternative is to use invoice factoring. As a tool factoring invoices enables your company to get paid in 2 days rather than in 30. Factoring invoices can be incorporated into most companies and work as follows. First you deliver your product or service. Then you invoice your client. Now instead of waiting to be paid, you send the invoice to the factoring company. In turn the factoring company advances about 80% of the gross value of the invoice to you. Once your client pays the invoice, the factoring company advances the remaining 20% of the invoice to your company. Factoring costs can be higher than the costs of conventional products, which should be taken into consideration when looking into invoice factoring. Monthly fees can be anywhere from 1.5% to 3.5%. This fee is decided on based on the company's industry, financing volume, and other parameters. However there are many invoice discounting companies out there to choose from, make sure to research and take your time when deciding on an invoice factoring company. To review, should your company or business use invoice factoring? If after reading through the information before, if the following statements are true, then accounts receivable factoring should benefit your company. You cannot afford to wait 30 to 90 days to get paid by customers. You need money to pay suppliers or employees. Companies that need money to pay for ongoing expenses, such as employees or suppliers can really benefit from invoice factoring. Invoice factoring will streamline cash flow and help your company to meet ongoing obligations. However companies that need the funds to purchase equipment or to buy real estate will usually not benefit much from invoice factoring. There are other products in the market that will be better for tasks like that. |
||
Copyright 2003-2020 by BusinessKnowledgeSource.com - All Rights Reserved
Privacy Policy, Terms of Use |