It can be stressful and frustrating when your business experiences cash flow fluctuations. These fluctuations are often the result of payment gaps in your accounts receivable. Simply put: you’re not getting your funds fast enough after completing your service or projects.
This is where business factoring comes in. Factoring services help businesses like yours bridge those cash flow gaps with upfront cash advances — usually 90% or more of the original invoice amount.
Many businesses benefit from accounts receivable financing option. It provides business owners with flexibility, whether a short-term funding solution or a long-term financing option for managing cash flow.
If you’ve never heard of factoring before, we’ve compiled a list of industries that can benefit the most from invoice factoring.
The transportation industry
About 12 million trucks, vessels, rail cars, and trains move goods across the transportation network. Freight invoice factoring can help a wide variety of transportation businesses, including owner-operators, large fleets and freight brokers.
Freight invoice factoring is a simple solution for freight companies to increase their cash flow and better predict when payments will come in. Bank loans require good or established credit. They might be a non-starter for owner-operators or fleet owners just getting started, or others who might have hit a rough patch.
Freight invoice factoring gives you the ability to have your invoices advanced to you without putting your company in debt. You can use freight invoice factoring to help you pay your drivers, pay for gas and repairs and even buy new trucks.
Best of all, it’s your own money you’re using. It’s just been advanced to you. There’s no debt you need to worry about.
The apparel industry
The apparel industry is a tough nut to crack for a small business. Not only are you competing with other boutiques, but you’re also up against other e-commerce online stores that typically get paid at the time of purchase. In order to remain competitive, it’s crucial to maintain a steady cash flow to keep your company’s operations going.
Cash flow peaks and valleys happen throughout the season for every business. But if your apparel company business doesn’t maintain traction, it can lead you to wonder if you need to stop taking on more orders. Every business owner knows that you need money just to fulfill existing orders. You have to pay your staff, rent and other fixed costs.
With invoice factoring, you don’t have to stop taking orders. When you use apparel invoice factoring, you can get you paid on previous orders quickly, so you have the capital to update your equipment, make your payroll and stock up on inventory. A steady cash flow means steady business and means customers receive their orders on time.
The staffing industry
Staffing industries have slightly different challenges than other industries — promising to pay contract-based workers on behalf of your client. You don’t pay, the contractor doesn’t work and your client’s operations stall.
The good news is that staffing invoice factoring can solve the payroll issues, in addition to the costs of sourcing, recruitment and hiring. With a consistent funding source in place, you can more confidently bid on larger projects and advertise your services.
The manufacturing industry
Even the biggest manufacturing companies have issues with inconsistent cash flow. And when manufacturing businesses are low on cash because they’re waiting on money from their invoices it can make it impossible to accomplish even simple goals.
It’s all too easy to consider taking out a major bank loan to pay for these expenses instead of waiting for the money from your invoices to arrive. But this can drive your business into debt, which no company wants.
Manufacturing invoice factoring can help you avoid debt and gain the working capital you need to meet payroll on time, buy new equipment, repair equipment parts and more.
The technology industry
The technology industry is another highly competitive industry for small businesses. Technology companies face a saturated and competitive market for their services. The pace of business and the need for quick updates and upgrades to your company’s hardware and software requires access to capital.
More than that, technology companies are always trying to hold on to their best talent. Invoice factoring for technology companies can help mitigate potential payroll issues and keep your team intact.
Remember, with invoice factoring, you can fund your business through your own unpaid invoices instead of taking out a bank loan.
Bank loans often have high interest rates that can come back to bite you later. But with invoice factoring, you’re using your own capital. It’s just being advanced to you so you can use it when you need it.