25 April 5 Reasons Why Invoice Factoring Is Great for Business Expansion
When you’re just starting a business, you’re thinking of all the ways possible to expand it. Whether it’s a small or medium business, it has the potential to become big. For proper growth, you need to invest a lot in the company, which may be difficult. Loans are a good option, but they may lead to a lot of debt in the future.
Another option would be using invoice factoring to expand your business and here are 5 reasons why you should do it.
1. It Allows You to Work with Larger Clients
Especially when you’re at the start of the journey, working with big clients is barely possible, as you don’t have access to proper working capital. After all, a large client will require a lot of equipment, as well as inventory, time, manpower, and many other things.
Luckily, by factoring invoices, you will have easier access to bigger clients. It lets you get the right amount of money, so you can deal with a bigger order or client, which is great if you want to grow your business.
2. It Doesn’t Add Debt
Unlike loans, which put you in a lot of debt, invoice factoring is different. Since it’s an amount of cash that your business has earned already, it’s not a loan, but an amount waiting to be paid. It won’t add any debt as a result.
3. It’s Quick
You don’t want to wait too long to start growing your business. While you may have to wait a while to receive a loan, getting your invoice factoring funds doesn’t take that long. The amount owed to your business can be obtained in just 24 hours, or even less than that. So, you get your money fast and can start investing.
4. No Financial History Is Needed
Whereas a loan application process takes longer considering financial history is taken into account, the same cannot be said about invoice factoring. When you’re factoring receivables, the company looks into the clients’ financial standing, instead of the financial history of the business. This is great for startups.
5. Flexible Financing Amount
If you have a growing company, then invoice factoring is great, as the available cash is only limited by how many eligible invoices you have to factor. So, your business’s credit line can increase as you build a good relationship with the factoring company.
If you want to grow your business, invoice factoring or accounts receivable loans can be the best alternative. When looking at the reasons above, it’s obvious why it’s worth it.