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Invoice factoring works like this:

1. You send your accounts receivable, or invoices, to your factoring company

2. The factoring company pays the you up to 90% of that invoice in 24 hours, while keeping the rest in a reserve account

3. Your factoring company professionally handles the collection of your invoices

4. You receive the remaining invoice amount that was in the reserve account, minus a small fee

More and more small to medium size businesses are discovering invoice factoring and realizing the value it provides to their company. So why are these companies raving about this easy, cost-effective form of alternative financing, and how are they using it to help meet (and sometimes exceed) their business goals?

It’s simple.Rather than send your invoices to your customers who may take 30, 60 or even 90 days to pay, factoring companies buy your invoices from you for a nominal fee and you get paid fast-usually by the next day. The factoring company then forwards those invoices to your customer and professionally handles the collections. Companies who use invoice factoring rely on the professional collection services that are part of the process, allowing them to save money and focus on other parts of their business.

It’s smart.There are several reasons why smart companies choose factoring as a financial option for their business. Here are 6 reasons why an alternative financing option like invoice factoring might be right for your business:

1 Factoring does not create debt. Let’s be clear: Factoring is not a loan. This is money you already earned. You simply pay a small fee to access it sooner.

2 Factoring takes the stress out of invoicing. Chasing down payments from a customer is a total drag. A factoring company will collect on behalf of you, offloading a tedious, time-consuming process.

3 Factoring opens doors. If you want to expand your business, you need a healthy cash flow. Factoring puts money in your pocket so your company can reach its goals.

4 Factoring is flexible. Some invoice factoring companies allow you to factor only the customers you choose—giving you added flexibility. Smart companies utilize factoring for specific customers. Have a customer who pays you in 15 days? Luck you! There’s no need to factor them.

5 Scroll down to continue reading.

6 reasons savvy business owners are TURNING TO INVOICE FACTORING

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Factoring (fak-ter-ing):The sale of a company’s accounts receivable invoices to a factor to obtain working capital; this is also known as receivables factoring, invoice factoring, bill factoring, accounts receivable factoring, accounts receivable funding and invoice discounting. It is an popular method of financing used worldwide to help all types and size of companies.

Got a question? Need some advice? Give us a ring. 800.705.1500eCapital.com

Who is eCapital anyway? We’re in the business of buying your accounts receivable to give you fast cash and financial freedom.

Connect with us and find out more.

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“I needed quicker access to cash for my company, so I looked into invoice factoring. It turned out to be the perfect solution for my company,” says Bill.

5 Factoring is cost-effective. Internal back office support can be expensive. Factoring typically costs just a few cents on the dollar. Compared to the expense of hiring an employee to manage your accounts receivable, factoring makes good business sense.

6 Factoring grows with your business. You won’t outgrow factoring because most factoring companies don’t set maximums. Even as the number and size of your invoices grow, you can keep turning them into cash to fuel continued expansion.

It’s effective. Bill W., a business owner in Texas, understands the value of factoring and utilizes it as part of his comany’s financial strategy. When he first started his company a few years ago, he was looking at several different financial options, and realized that factoring was an ideal way to improve the cash flow for his young, yet growing company.

“I needed quicker access to cash for my company, so I looked into invoice factoring. It turned out to be the perfect solution for my company,” says Bill.

He also says that his factoring experience has exceeded his expectations. Since he started factoring his invoices three years ago, his company has tripled its revenue.

If you’re a business owner, you know how tough it can be to lack the cash you need to keep your business running. A smart alternative financing option, invoice factoring can provide quick access to crucial working capital without the hassles of dealing with bank-related loans.

If you have questions about whether invoice factoring is a good fit for your company, chat with one of our friendly factoring consultants at 800.705.1500 to learn more about factoring and how it can meet your business’ financial needs.

6 reasons savvy business owners are TURNING TO INVOICE FACTORING