7 Reasons to Choose Invoice Financing to Fund Your Small Business

7 Reasons to Choose Invoice Financing to Fund Your Small Business
Caitlyn Rose
on December 23, 2015
Read in 2 min

While it’s vital that you allow customers to pay their invoices over a period of time, the reality is that you’d prefer to have that cash on hand as soon as possible.

As the owner of a small business, you will probably face this kind of catch-22 at some point. After all, timely customer payments are what you use to pay employees, make needed improvements, and buy inventory.

These days, obtaining a loan from a traditional bank is getting increasingly difficult for small businesses like yours. Instead of tapping into your own personal funds, asking friends or family, look no further than invoice financing loans as a realistic way to get the fast cash you need. Instead of letting overdue customer invoices gather dust, sell them to a lender and get money in a matter of days.

Below are 7 reasons to choose invoice financing:

No New Debt

Unlike other loan types, invoice factoring is not technically a loan. Instead, you are merely gaining access to your own money a little faster– plus additional charges for the privilege of using the invoice financing service. Since you’re not taking on new debt, this option will keep your balance sheet clean.

Better Control of Your Cash Flow

With an invoice financing loan, you can declare your independence from the tyranny of customer invoices. You now have access to a reliable influx of income, making it possible to spend these funds on the various things you need in order to run your business.

Fees Are Lower

Compared to traditional term loans, merchant cash advance loans, or lines of credit, the fees you pay with invoice financing tend to be much lower. As an entrepreneur for whom every penny counts, this is an important distinction.

Invoice Financing Grows With Your Business

As your accounts receivable blossom, so does your working capital. Best of all, there are no fixed lines of credit, and you only need to qualify once.

Increased Working Capital

With additional working capital comes flexibility and freedom. No longer burdened by worries of where the cash will come from to expand your products and services, you can take your business to new heights that could catapult you to the next level of success. Furthermore, you will now have the wherewithal to offer more generous payment terms to your loyal customers, a sure way to encourage increased sales from them in the future.

Free Up Your Time

When you take out an invoice financing loan, you are required to pay some additional costs called factors. These fees cover the lender’s costs involved in obtaining customer payments, running credit checks and chasing down late invoices. Now that you’re spared the aggravation associated with these tasks, you can use that time to grow your enterprise.

Better Control Over Your Invoices

With this type of arrangement, you can choose whether to finance some or all of your invoices; it’s up to you. This way, you can continue to manage the invoices of customers who pay on time, leaving your invoice financing company to deal with the less reliable clients.

Wouldn’t it be wonderful to be able to provide training to your current employees and hire new ones? Imagine the liberation of making your payroll without stress every time! Finally, you can take advantage of exciting opportunities that arise and have the capacity to purchase the inventory you need. All of this is possible once you harness the power of your own accounts receivable with an invoice financing loan.

Caitlyn Rose Finance Journalist

Caitlyn is a small business consultant and editor for LendGenius with an intimate understanding of business finance.

She’s an entrepreneur at heart & supports local businesses whenever she can.


2018 Tax Audit Triggers Business Owners Need to Know

by Amy Fontinelle on February 16, 2018
While the overall risk of an individual tax audit is low, the odds go up when you file a business… Read more

How Your Tax Strategies Can Affect Getting a Business Loan

by Caitlyn Rose on January 3, 2018
Traditional banks are increasingly wary of lending to small businesses because it's simply not profitable enough. Instead, they go after the… Read more

Low-Interest Loans & Where To Find Them

by Dustin Clendenen on December 15, 2017
Sometimes we fall behind on our credit card payments, and those high APRs can start to take a real toll… Read more

How to Get a Loan In 2018 (The Easy Way)

by Rebecca Hosley on December 6, 2017
Applying for a loan can be confusing if you've never done it before, or if it's been a while (technology… Read more

9 Techniques for Managing Seasonal Sales Fluctuations

by Jackie Lam on September 8, 2017
If you’re a small business owner whose cash flow is affected by seasonal sales — we’re talking seasonal companies like… Read more

Amazon Lending – A Comprehensive Resource on Business Loans from Amazon

by Caitlyn Rose on August 14, 2017
The Amazon Marketplace has quickly become a go-to channel for both large and small businesses looking to develop an online… Read more

7 Basic Business Loan Requirements – Know What Lenders Are Looking For

by Rissa Ann on August 5, 2017
There are more ways than ever to fund a business launch, expansion, or unanticipated expense, but business loan requirements can… Read more

The 5 C’s of Credit Deciding Your Business Fate

by Amy Fontinelle on May 8, 2017
When it comes to small business loans, success is spelled with the 5 c's of credit. We know, applying for… Read more

How to Sell to Millennials in 2018 – What is a Millennial Person Thinking?

by Brenna Lemieux on May 5, 2017
With Gen Y collapsing under it's own debt, learning how to sell to millennials may not be your highest priority for… Read more

5 Types of Grants For Women-Owned Businesses

by Caitlyn Rose on December 29, 2015
If you are a woman thinking about starting a small business, you are part of a growing trend. Since 1997,… Read more
Join For Free & Start Browsing Loans