Did you know various businesses and companies from countless industries use small business invoice factoring to fund their business operations? Well in fact they do.
Invoice factoring, which is also referred to as accounts receivable financing, offers the funds you need to grow your business in a straightforward and simple manner. Due to its numerous benefits, many business owners opt for invoice factoring, and here’s why.
- Startups and small businesses can easily qualify
- A streamlined process when setting up your account
- It improves your business’ credit
- Working capital is generates without borrowing money
- Time, effort, and money is saved when processing invoices
- The lenders/factors are knowledgeable and understand small businesses, and they may even offer a savings program
Small Business Invoice Factoring vs. Your Customers
Despite all the benefits mentioned above, there are still business owners who hesitate to tap into invoice factoring.
This is so mainly because they’re concerned about their reputation, in the event customers or suppliers discover they’re using invoice factoring. Since business owners sell their invoices in exchange for immediate funding, customers and suppliers might think their business isn’t doing well which set off the alarm bells.
But contrary to popular belief… invoice factoring is not only beneficial for your business, but to your customer base as well.
Here are three reasons why:
1. Streamline the Accounts Receivable Process
For many small business owners, invoice collection can be a hassle, especially if you handle multiple clients at once. With invoice factoring, the burden of collecting payment is assumed by the factoring company or lender. Instead of paying the funds to you, your customers will pay their invoices directly to the factoring company/lender. By delegating this task, you can free up your time and spend it growing your business, while securing the funds you need at the same time. A genuine win, win.
2. Enhance Your Customer Service
When you use invoice factoring, your customers will pay their balances to the lender. This means that factoring companies/lenders will be working directly with your customers. Renowned factoring companies have a reputation for providing high quality and professional customer service. Yet another win, win.
It’s also worth noting that the factoring company is not competing with you, nor do they have a desire to be in your industry and compete with you. So, there is no chance your customers will leave you and give their business to the factoring company.
Having said this, factoring companies are not debt collection agencies. Reputable factors/lenders understand that without customers, you don’t have a business, and neither will they. This is why they go to great lengths to ensure they deal with your customers in a respectful and professional manner at all times.
However, it is your responsibility to look for a highly rated factoring company. When your clients work with an unpleasant factor/lender, it can negatively affect your company.
3. Boost Your Company’s Growth
As your business grows, so too will the benefits to your clients and customers. By using invoice factoring, your business will have a steady influx of working capital. Invoice factoring also lets your clients know you have a financial cushion and that you have your finances under control, which enhances your reputation in the eyes of your customers.
It also demonstrates you have sufficient funds for daily operations, as well as business expansion. Clients are more inclined to work with successful businesses, so proper cash flow management is crucial.
If you want to discover how small business invoice factoring will enhance you and your business, the experts at SMB Compass can answer all your questions. We have funded thousands of small businesses all over the United States.