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Recession-Proofing Your Business with Invoice Factoring


May 14, 2015

My first cousin, James is a long-haul trucker based out of Pennsylvania, and every time he comes through my hometown of Dallas, I meet him at a Denny’s and offer to buy him breakfast. He never says no. It’s not just because James likes his grits (and he does like his grits). James has four young kids and a wife waiting for him at home, and he could use a free meal. And me? I pretty much think truckers deserve it. After all, most American families couldn’t eat breakfast or dinner, for that matter, without the fresh goods truckers deliver each day. Yet, freight haulers don’t always know when their next load is coming in, or when they’ll get paid.

James has shared with me how stressful it is for his family when work slows down; and it may take weeks or months to pick back up again. But in the meantime, bills are coming due, and cash flow is dwindling. And, even though he may have hauled plenty of loads to pay the bills, he might not get paid for 30 days or more. Any small business owner can relate to the problem of having more month than money. That’s why I was pretty interested when I heard about invoice factoring, an alternative funding source that’s quite common in the trucking industry, but which can be used for just about any business that meets the invoice factoring company’s qualifications.

Freight brokers, independent truckers, staffing agencies, and government contractors are just a few of the business types that can benefit from this unique funding model. Here’s how it works:

What is Invoice Factoring?

Invoice factoring is the sale of your business’s accounts receivable (invoices) to an invoice factoring company. When you engage in accounts receivable financing, you receive immediate payment of approved invoices from the invoice factoring company, in exchange for a small percentage of each invoice. The factoring company then collects payment from your client.

How can Invoice Factoring help your business get through difficult times?

  • Access Working Capital from a Trusted Source

    During the recent recession, as mortgage lenders, banks and other financial institutions folded, invoice factoring survived, and even grew in strength. Because the invoice factoring industry is fueled by accounts receivable instead of loans, its foundation is stable. This type of financing has been around for hundreds of years, but it gained credibility after the recession. Triumph, formerly known as Triumph Business Capital is an invoice factoring company with over a decade of experience. Now that it is part of the Triumph Bancorp Group, it has the bedrock financial stability to provide its customers with even greater flexibility and capacity.

  • Pay Expenses in a Timely Manner

    With invoice factoring, you don’t have to wait for your clients to pay their bills in order to pay your vendors and employees, order equipment, and cover other business expenses. Invoice factoring companies like Triumph will pay your unpaid invoices in as little as 24 hours, so you can get the working capital you need, and get back to doing business.

  • Eliminate Collection Concerns

    When you process all your invoices with an invoice factoring company, you can end late-payment worries, and turn over the collections process to them. Triumph provides free credit checks for all your clients, and they offer both recourse and non-recourse invoice factoring for approved clients. This service ensures you will not be held liable if your customers do not pay their bills.

  • Avoid Late Fees

    If you are late paying your vendors or contractors, you may end up paying
    additional late fees and penalties. Worse yet, you may find it hard to obtain the services your business needs in the future. Invoice factoring companies only charge a small percentage of each invoice in order to provide you with immediate payment. During slow business periods or tough economic times, this may be less than the amount you might pay in late fees and penalties, if you are unable to pay your bills.

  • Get Cash Fast

    Sure, you could turn to a bank for a small business loan. But, banks charge high interest rates — and it can take weeks to get approved, if you are approved at all. With invoice factoring, approval is quick and easy. In most cases, you can get paid for your invoices in 24 hours.

  • Survive Tough Times Without Making Them Worse.

    In slow economic periods, the last thing a growing business needs is to incur more debt. Invoice factoring allows you to get the capital you need, without taking on a loan. The money is already yours — you are just getting it faster.

Financial difficulties come and go — but if you’re reading this article, chances are, you are already working to overcome your current business challenges. Next time you need a stopgap to cover upcoming expenses, you may want to consider invoice factoring. You can contact Triumph, formerly known as Triumph Business Capital if you’d like to learn more. And, next time you see a trucker, tell them “Thanks for breakfast.” They’ll know what you mean.