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Small Business Benefits from Invoice Factoring

It is not easy to maintain good working capital for your small business. Often the cash that you need for your business to grow and avoid shortages is tied up in accounts receivable. Financing is not always an option because of credit or other issues, but there are alternatives like Invoice Factoring. There are some benefits to factoring your invoices such as freeing up capital to grow, having an in-house credit team, and having a product that acts like credit insurance.

What is Invoice Factoring?

With factoring you are selling your outstanding accounts receivable to a factoring company, such as Eagle Business Credit, at a discount. Eagle Business Credit assumes the risk of the your accounts debtors and you get cash immediately. Keep in mind that most factoring companies will not factor accounts that are older than 90 days.

Free Up Working Capital

If your small business is like most others then the majority of your capital will be tied up in outstanding accounts receivable. With Invoice Factoring you can get that capital back more quickly than if you were to wait for the accounts to be paid. By having more cash on hand you can expand your business, solve cash flow problems, and much more.

Having An In-House Credit Team

How many small businesses do you know that employ an in house credit person to analyze and check credit on the business’ account debtors or who they sell too? The answer is virtually none. This is dangerous as how do you know who your really doing business with?  When you ship a product or perform a service to your customer you are essentially making a loan to them. But the fascinating thing is that you know nothing about their ability to pay you for your products or services. By factoring you are not only turning your invoices into cash but also have a team of professionals that are constantly monitoring and checking the account debtors you are doing business with. A factoring company can advise you to do business or not to do business with certain account debtors by analyzing their business credit.

Just Like Credit Insurance

If you are presented with a factoring facility that is non-recourse then this could insulate your business from bad receivables. Non-recourse simply means that if your account debtor that you factored an invoice from does not pay on the invoice for any reason or the account debtor goes out of business, you do not have to repay that money that you factored. This is not the case if you’re dealing with a recourse factoring facility. With a non-recourse factoring offer, you are essentially obtaining credit protection on your receivables and turning invoices into cash at the same time. Traditionally credit insurance is only feasible for large businesses which could be very expensive to secure.

With the right help your capital issues can clear themselves up and allow you to grow your business or help out in a cash crunch. The benefits of factoring receivables over traditional financing options can be the biggest argument for getting help with your accounts receivable through Eagle Business Credit.

Contact us today and learn about how we can provide Invoice Factoring for your business!