There are many forms of business financing available as various circumstances arise. One common type, which has been around for centuries, is called invoice factoring, and perhaps it may be useful for your business.
What Is Invoice Factoring?
In plain English, factoring is the process of selling your unpaid business invoices to a third party. You sell them at a slight discount to face value. This created a win-win situation. You get an immediate payment of cash and are no longer responsible for chasing down unpaid invoices. The agency to whom you sold the invoices gets to collect the full value on the invoices.
Businesses that Use Factoring
Any business that routinely issues invoices may be a good candidate for factoring. For example, trucking, transportation, distribution, textiles, and manufacturing businesses commonly utilize factoring options.
The Benefits of Factoring for your Business
The principal benefit of factoring is that you will have an immediate infusion of working capital without having to wait for an invoice to be paid. In many cases, customers pay their invoices late – sometimes very late. By utilizing factoring, your business avoids this problem completely. Your up-front payment can arrive from the factoring agency in as little as 48 hours.
A second benefit is that factoring is often much easier to obtain than other forms of financing such as a loan from a traditional bank. This is especially beneficial if you are an owner of a startup and don’t have a strong sales and revenue history established yet.
Seek Expert Assistance
DAL Commercial Capital would love to hear from you if are intrigued by the potential of using invoice factoring for your business. Give them a call. Their talented and courteous staff will review any additional queries that you may have.