You may have heard horror stories about factoring, or at least whispers that painted it in an uncomplimentary light. However, factoring can be one of the most convenient and practical ways of quickly generating cash to relieve financial stress on your business.
Here are a few reasons why factoring can make a lot of sense for your company, and why you should have absolutely no fear of giving it a try.
Less expensive than you think
Businessmen have floated around unrealistic percentages which factoring companies charge for their service. You may have heard an estimate of 3% per month on factored invoices, which of course would work out to 36% annually. However, factoring fees don’t work this way, because customers will always pay those invoices well before a year transpires. Since a typical customer would pay an invoice within a month or two, the actual paid percentage would generally be between 3% and 6%.
No long-term commitment
Unlike bank loans or loans from other lending institutions, factoring does not call for a long-term commitment. Most alternative lenders offer contracts which vary between three months and six months, unless the client prefers to arrange for a longer period of time.
Great credit score is not necessary
You can qualify for invoice factoring even if your credit history is relatively poor. The reason for this is that a factoring company is primarily interested in how quickly and faithfully your costumers pay their invoices, rather than your company’s credit history.
Factoring terms are customizable
Most alternative lenders offer invoice factoring to a variety of businesses, and that means they have already established models upon which factoring terms can be based. You may have unusual terms associated with your invoice payments, but chances are the factoring company has run into that specific situation before, and can apply the appropriate model to your factoring setup.
You’re out of the collections business
Once you arrange for invoice factoring with an alternative lender, you’re relieved of all responsibility of collecting payments on those invoices. That means you can focus your energies on running your business, rather than chasing down customers for payments.
Factoring with Bear River Financial
At Bear River Financial, we are always prepared to provide financial assistance to small businesses through a variety of products, one of which is invoice factoring. If you need capital quickly to keep your business running smoothly, contact Bear River Financial and inquire about factoring.