Invoice factoring for entrepreneurs

What Entrepreneurs Should Know About Invoice Factoring

You’ve launched a business, built a team, and attracted a base of clients who love what you do. In other words, you’ve become a real-deal entrepreneur. So now what? If you want your company to continue to grow, you’ll need to finance your business for both the short term and the long haul.

To get the business funds you need, you’ll need to consider the most common financing solutions, such as lines of credits and loans. Both can be viable options, but you may not be aware of another finance solution for entrepreneurs — invoice factoring.

Here’s what entrepreneurs should know about invoice factoring.

Bank Guidelines are Strict

Bank loans are difficult to secure because banks are conservative about lending. To be approved for a loan,  you need to have an impressive credit score. Additionally, banks rarely finance entrepreneurs and startups, as they don’t have long, established track records.

The reality is that not every business is going to require large sums of financing. For this reason, it may not be worth it for entrepreneurs to take out a loan. Instead, they may choose an option that will give them quick cash without high interest rates and minimizes debt.

Underwriting a bank loan or line of credit is a potentially lengthy process. You may need to wait weeks to hear back. By contrast, the approval process for invoice factoring is quick and easy. The requirements aren’t as strict. If you’ve been unable to secure financing from a bank, you may want to consider invoice factoring to get the capital you need.

Most invoice factoring companies will approve you for factoring within 1-5 business days and can provide funds shortly after that.

Factoring Can Improve Vendor Relationships

Factoring accommodates growing businesses because your funding grows with your sales. Additionally, factoring doesn’t negatively impact your credit score – in fact, it can even improve it! A good business credit score builds trust with customers and vendors alike.

With business factoring services, you won’t have to decline a large order because you’ll have the funds you need to keep up with the demand for your products or services. The consistency of funds rolling in ensures that you’re better prepared to pay vendors for services in a timely manner.

Ultimately, your vendors aren’t preoccupied with how you choose to finance your business operations. They care about getting paid quickly and consistently. Invoice factoring provides the flexibility and capital to make on-time payments, which keeps vendors happy and ready to take on the next project for you.

Invoice Factoring Will Help You in the Early Days

A lot of small businesses have a cash flow deficit when they first launch. Nobody aims to start off with little cash, but the initial cash you have will be spent quickly. It isn’t uncommon for business owners to find themselves in a financial predicament even when they’ve done everything right.

Think about all the costs associated with new ventures: new technology, payroll, supplies and other costs that’ll keep your business running day in and day out. On top of that, you’re sure to encounter unplanned expenses, and these will only cause your business to run less efficiently if you don’t have the money to cover emergency expenses.

The good news is that invoice factoring will give you easy access to the funds needed to operate your business. When you factor invoices, you’ll get funding – usually in two days or less – while you’re waiting for your customers to pay.

Once your cash flow is sorted out, you’ll have the capital you need to invest in exciting marketing efforts, inventory and other growth opportunities.

Invoice Factoring Can Be Combined with Other Financing

One of the best things about invoice factoring is that it doesn’t need to be a stand-alone financing option. If you’ve got investors or savings that you’re putting into your business, there’s nothing preventing you from factoring your invoices as well.

Invoice factoring is easy to obtain, and it doesn’t build bad debt. Often, you can choose which invoices to factor and when to factor them, making it one of the most flexible funding options available for small businesses.

In some cases, you can even pair business factoring services with other lending, provided that the loan doesn’t interfere with your factoring agreement. For example, many companies that factor also take out equipment loans. When you combine invoice factoring with other finance options, you’ll never experience cash flow gaps.

It might be tempting to focus on venture capital or angel financing, but you’ll be competing with other businesses for those funds. Instead, explore the various funding options out there to ensure you can cover your day-to-day expenses. As an entrepreneur, it’s up to you to determine the best financing solutions for your company.

You Don’t Have to Run Your Business Alone

Entrepreneurs wear many hats, and many are stretched thin as a result. Invoice factoring allows you to focus on your products and services. When you work with a factoring company, you can relax knowing that a team of professionals is managing your accounts receivable, credit and collections. Factoring companies are there for you, providing you with a flexible funding solution that best suits your needs, leaving you free to service your customers and grow your business.

Owning your own business is fulfilling. Partnering with the right factoring company can help you pursue your business goals in both the long- and short-term.

At Triumph Business Capital, we combine industry-leading innovation with experience to help our clients grow. We’ll work with you to arrive at a financing solution that meets your needs. To contact us and talk about how we can help your company, please click here to talk to a factoring specialist.


INFOGRAPHIC: Invoice factoring for entrepreneurs