So, why is factoring particularly a good fit for janitorial companies? There are a number of reasons. The janitorial company is going to have that classic cash flow gap. What do I mean by that? Well, you have to buy supplies, cleaning supplies, not only that but you’ll have a team of staff that you employ to go out and perform the service. So, when you have a team of staff you have a big payroll bill. Those people will want to be paid, perhaps weekly or bi-weekly, and maybe your customers are only going to pay once a month. So, immediately you can only bill out once a month maybe. But you’ve got to pay out several times a month not only to buy supplies but to pay wages. That’s the cash flow gap.
How Does Factoring Benefit Janitorial Companies?
Factoring will help you cure that problem because as soon as you’ve completed that monthly billing, we will advance funds to you. Then you can use those funds for working capital requirements be it payroll or buying supplies. Remember also that if you’re working with a particularly large supplier that you’re reliant on and you’ve got extended terms with them because you need that cash flow support at the moment, you can actually go back to that supplier and hopefully negotiate a discount for early payment or quicker payment. You can actually use that early pay discount to offset some of the costs of your factoring. So again a lot of our clients particularly in the janitorial space will use the cash flow that we provide not only for their operating expenses or their payroll but also to get great vendor discounts. It’s really not expensive . It costs two or three percent off of your invoicing value. If you can cover that with a discount from a supplier then it’s a great way to manage and offset the cost of factoring.
Janitorial Companies and Eagle Business Credit
It’s debt free. It’s not a loan. With factoring you give us the invoices. We advance the funds. We get paid by your customer, so you don’t have to worry about making a loan repayment and having debt on your balance sheet. It’s not like that at all. It’s an early advance or prepayment against your receivable while we then wait for your customer to pay us. Your customer repays that advance that we made to you. It’s a very simple process that works extremely well for janitorial companies. It’s really pain-free and a very simple approach. We have many janitorial companies that are satisfied because it really becomes an extension of their business. It helps them pay their people, get their supplies, and they don’t have to worry about repayment. It’s a great fit.
