AR Factoring In 2020
Factoring is a form of financing that can help companies with their cash flow issues. It allows businesses to finance their invoices to increase their working capital. Cash is the lifeblood of businesses and without it, your business can’t grow. Factoring invoices provides flexibility for businesses struggling with cash flow.
How Commercial Factoring Can Benefit Your Company
When times are hard on your business, it’s time to look for an alternative. Luckily, there are several different ways to help your business in its hour of need. Thanks to the work at United Capital Funding, we’re able to help clients get their cash and use it to improve business. But how? With commercial factoring!
Factoring Finance Mythbusting!
Remember the stories we used to hear when we were kids? Creatures like Bigfoot or stories like Hercules were myths we believed… at least for a little bit. But even though we’re older now and know better, there’s still the occasional myth that we tend to believe. Specifically with real-world actualities. And — just like with any industry—there are plenty of myths associated with factoring.
Why Are Companies Selling Account Receivable?
Every business owner encounters a situation where they need more cash for operations. You can have a superior product with large profits. However, if cash flow is bad, your business will suffer. It is possible to be successful in business but still encounter cash flow issues since good cash flow is essential to running a successful business.
Need Help With Your Cash Flow?
From time to time, businesses fall short when it comes to their cash flow. This can cause problems with payroll, business expenses, or even with client acquisitions. Most businesses have accounts receivable, but it takes time to invoice clients and then collect any outstanding debt. Well, what happens when your money runs dry?
Bank Loan vs Invoice Factoring
Entrepreneurs commonly ask us how invoice factoring differs from a traditional bank loan. We understand the language and benefits can seem tricky so the team at United Capital Funding (UCF) is here to help you better understand the differences.
The Basic Difference
Invoice factoring, also called accounts receivables factoring, comes down to three steps:
- UCF reviews the invoice you sent to a customer. Once verified, UCF advances a large percentage (typically 80%) of the invoice amount to your company.
- Your customers sends the full payment amount to UCF.
- UCF processes the payment and sends the remainder (typically 20%) back to your company, less our small professional fee.
When a bank offers you a loan, they're primarily concerned with making back the amount you owe plus accumulated interest. If the bank approves your request, you're entered into a complicated process. Banks aren't on your side and typically only consider the financial reputation of the company and its owner. Both of which are likely not desirable in the case of new businesses and its owners.
That’s where invoice factoring differs. When you come to an invoice factoring firm for a financial jump-start, we “factor in” all the invoices you send to your customers. In other words, we fund companies that have creditworthy customers. We know that if you're making money, you're a trusted partner.
Support Your Team
As the lifeline of your new company, employees need to be paid on time. But while you’re waiting to receive money from your customers, your payroll deadline may come and go, leaving your employees with an unreliable income source. Our payroll factoring services allow you to meet payroll needs by funding invoices from approved customers as soon as they’re verified, giving you a reliable source of capital that you can count on for payroll.
Get Your Money’s Worth And More
When you’re starting a business, you often need an entire set of resources—in addition to faster capital—to grow and profitably manage your business. Our firm provides many of these key resources at no extra cost to your business:
- Credit investigation – we help you predict a customer’s ability to pay promptly, at no cost. This will help you avoid slow-paying and nonpaying customers.
- Save time - our seasoned professionals can reduce the payment time of your outstanding receivables.
- Accurate online reporting - we provide complimentary detailed accounts receivable aging and status reports through a secure online system that is available 24/7.
Unfortunately, a traditional bank loan doesn’t include many of these helpful resources. With the help of UCF, we allow you to focus your time and talents on managing and growing your business. These tools are part of how we help your business become a success.
Invoice Factoring Articles
Invoice factoring is a great strategy for startup businesses and our team is ready to help! Call us at 866-647-2680 with any questions or apply online to get started immediately.
Article Posted On: March 13, 2020