INVOICE FACTORING – MORE THAN JUST FINANCING
Invoice factoring is one of the oldest forms of financing available to business.
The purpose of invoice factoring is to speed up your company’s cash flow. By speeding up the cash flow, business owners can scale their sales by leveraging responsibly. However, invoice factoring is more than just financing.
Benefits Of The Factoring Agreement
In a factoring agreement, the client engages the factoring company as their credit and collections department. In a factoring contract, all accounts receivable are collected by the factor from the company’s customers. This collection function serves in conjunction with the credit management of the customer base. The factor approves the customer for credit by conducting industry background checks using management systems not available to business owners (think of this like a personal credit report, but only for business entities). The factor can see the customer’s history of payment and financial condition. There may also be an insurance policy taken out on the customer. This insurance policy provides an additional layer of protection for the lender and a sophisticated credit management system for the business owner.
Grow Your Business And Reduce Your Fixed Expenses At The Same Time
As your company grows, factoring contributes to the bottom line. Instead of hiring more staff to manage the credit and collection functions (or any staff for that matter), you can outsource these responsibilities to the factor. The cost of hiring new employees, medical benefits, paid time off, investment and savings programs, etc. are all eliminated when using a factoring company.
The Factoring Advantage
Invoice factoring provides the client with financing to grow the business while at the same time managing the credit risk associated with that growth. Factoring companies have more resources available to them than the average business owner. The factor becomes a partner to their business versus simply an outside financier.
Could your company use invoice factoring to grow? If so, we would like to speak with you!
Patrick Zazueta | President
Huntington Coast Capital, Inc.