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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:
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.
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.
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.
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.
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.
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.
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.