Is Invoice Factoring the Best Solutions for Short Term Funding?
By: Ryan Attelle
Do to the nature of some businesses they don't have a huge amount of assets to fall back on. There are many businesses that run on relatively low overhead, relying mostly on there customer base as a source of revenue. This can make thing difficult when in need of a short term loan. That's why many have found a solution in invoice factoring.
Usually once all the proper paperwork has been filled an invoice factoring company can have funds in a business account with in about 48 hours. As far as the paper work is concerned one can easily argue that the paper work required for invoice factoring is far far less then that a bank loan requires. The great thing about the paperwork is that in most cases its a one time deal. The information is kept on file so the next time factoring is needed, all the paperwork is already done from before.
Many small business would also point out that invoice factoring appears to be quite expensive. This can be difficult for many to handle, especially small businesses. The real question is invoice factoring is expensive compared to what? The real value of invoice factoring is the availability of cash when it's needed. The real expense come in when considering the inability to perform new jobs due to a lack of funds. Invoice factoring provides those funds so a business can continue to move forward, something which many consider priceless.
Many businesses look for funding because of short term reasons, and are not really interested in any long term relationship. In fact it is because of this many are reluctant to look for outside funding. Invoice factoring company’s are not interested in locking businesses in to any long term relationships as well. This is because they are built to deal with short term loans that are to be used when the business needs it. That's it, end of story.
What is most attractive to many is the fact that invoice factoring is not technically a loan. What is actually happening is the invoice factoring company is making an offer to purchase invoices that have not yet been fulfilled. In fact the funding doesn't even show up on a businesses balance sheet.
There many businesses that have concerns about entering an invoice factoring relationship, but when faced with the facts of what the service actually provides those concerns are quickly alleviated. All and all invoice factoring is one of the simplest hassle free solutions for short term funding.
Connect with Ryan on Google+ or Go Back to Article Index