10 Reasons to Look for Commercial Factoring Companies

So you’re looking for additional funding for your company. It’s safe to say that you’re not alone in this situation. But even though you have lots of options now when it comes to funding, perhaps you should take a look at factoring. Commercial factoring companies may be better for you than traditional lenders.

Here are some situations when you should seriously consider dealing with commercial factoring companies:

  1. Your application for a loan or credit line has been rejected. This is pretty much one of the most common reasons for choosing factoring as a source of funding. In fact, the current popularity of commercial factoring companies was because banks started to tighten their belts when the recession began.
  2. You’ve pretty much reached the limit on your current line of credit. Getting an extension or getting a new line of credit from another bank may not be possible, and even if it is, the money may come too late for your needs.
  3. You don’t want to put any more debts on your balance sheet.
  4. You can’t pay for operating expenses or meet payroll. This inability to pay can hinder your operations, sully your company’s reputation, or even shut your company down altogether.
  5. You can’t pay your bills or your debt obligations. Not only will your reputation suffer, but this can also have a negative effect on your credit. That, in turn, can make it more difficult for you to get a loan or a line of credit from a bank.
  6. You can’t purchase materials you need to meet orders. Orders are opportunities for you to make a profit, and by not having the money you’re losing these opportunities
  7. You’re turning down clients who demand at least 30 days to pay. Again, this is limiting your profits, and perhaps also damaging the relationships you’ve formed with clients.
  8. You are a small company or your net worth is negative, but your customers have excellent credit. The size of your company or even your negative net worth is not really of concern to factors. The most important consideration is the likelihood that your customers will pay you. If your customers have great credit, then you’re a shoo-in to get your funding.
  9. You can grow your company faster or more easily if you had the funds available. Growth is crucial for a company, and for that you’ll need the capital which factoring can provide.
  10. You want to take advantage of vendor discounts. Usually, vendors may allow you to pay in 30 days too. But they may offer significant discounts if you pay earlier or even pay upfront. By getting the money in advance from your invoice, you can pay right away if the discount is larger than the fee charged by the factoring company.

Do any of these statements apply to you? If that’s the case, then you are a good candidate to apply for, and receive funding from, factoring companies.