Is this economic downturn over yet? We think so!
Even though the recession has been theoretically over for a while, finding business financing is still almost as challenging as it was during the recession!
This is as a result of a mixture of lending institutions getting in bad financial shape and lenders remaining more conservative in their lending.
In the end, they only offer business loans to organizations that are in pristine shape. Meaning that companies should have 2-3 years of positive financial statements, have strong cash flows, strong assets and a veteran management team.
On the other hand, few companies have made it through the recession untouched and most can’t meet these prerequisites. When a company is viable but has a less than perfect past – what is it their options?
Almost all companies that look for funding usually have a similar problem – poor cash flow. This issue starts (or worsens) when clients start paying their invoices overdue or start asking for longer payment terms. Invoices that used to be paid in 15 to 20 days, now get paid in 30 to 40 days.
A few clients may take up to 60 days to pay an invoice. Meanwhile, the company still needs to cover all their current expenses.This can put a company in a risky position, particularly if it does not have strong cash reserves.
These Companies gamble on missing a important supplier payment or worse, lacking payroll. A method to fix this problem without using a business loan is to use invoice factoring.
Invoice factoring provides an advance for slow paying invoices. This offers the company with the essential funds to meet supplier payments and other expenses. More essential, it stabilizes cash flow by providing predictable invoice payments, allowing the company owner to focus on growing the business.
Any time cash flow is tight, owners stress over taking on new business and adding customers due to the fact they are unsure if they should be able to cover expenses right up until the client pays. Invoice factoring solves this problem – permitting the business to take on new clients and grow.
Including factoring to company is fairly easy. Commonly, the factoring company will give you an advance of up to 85% on your invoice as soon as the work is completed. The remaining funds, less the fee, are rebated when your customer actually pays.
Being approved for factoring is much easier than qualifying for other types of financing. The most important requirement to qualify is to do business with customers that have good commercial credit. Talk to our staff about our range of funding options.