When it comes to alternative sources of funding for companies, factoring has become one of the most popular and effective means. This type of funding has little to nothing to do with your credit, good or bad, and can be a quicker way to get the money that you need for projects and bills. To get the most out of this type of financing, you will want to know what it is, how to benefit from it and where to get it.
What It Is
Factoring is the process of selling your invoices to a company which will give you cash and collect on the debt in exchange for a percentage of the total. This allows you to have faster access to the cash you need for bills, big projects or business expansion than most other types of financing. Most of these companies deal with accounts receivable and you can generally find interest rates well below ten percent.
Equally as important as what this process is, is what it isn’t. When you factor your invoices, it is not a loan. Your credit is not checked and the process does not affect your credit score.
How To Benefit From It
Factoring can help make your income more flexible. This can help you get the business deals that you need, when you need them without having to wait for a customer’s payment to come in. A big reason why companies use this financing method is to pay your bills. The financing fees may be lower than your late payment fees, saving you money and getting you back on track.
You can also benefit from financing by being able to take advantage of large projects, business expansions and other deals as they arise instead of hope that it’s available when you have the money.
Where To Get It
Most companies who offer financing in the form of receivables will not have industry specific services. For instance, if you operate an autobody shop then you can sell your receivables to the same companies who handle those for art commissions. You can find many companies online and then narrow down your options to those with the best terms and reputations.
Factoring can be the best way to get quick cash for your company without needing a credit check. This is not a loan and will have little to nothing to do with your credit score, making it more accessible to your business. You can benefit from this financing option by having the funds to pay bills on time, to start new projects and much more.