If you have trouble collecting money owed to you, invoice factoring could be the ideal solution. Here are 10 ways in which it could benefit your business.
1. When it comes to processing payments, chasing up accounts departments of your debtors can eat up considerable portions of your time and distract you from working on other tasks. By having finance advanced to your business and handing over invoices to a factoring specialist, you can spend more time on important tasks.
2. The time you use chasing up outstanding invoices may also be costed within the company, so it could free up resources for other things.
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3. If you are in the middle of a cash flow crisis, you may not be set up to deliver a business plan or sales forecast to help you secure funding. Factoring could be the most effective way of raising the finance you need.
4. Young businesses may also struggle to secure the funding needed as they may not have the financial accounts required to convince a lender of their stability. Again, using some form of invoice finance could help.
5. Not being able to pay staff or suppliers or meet unexpected costs could see you having to default on payments. By raising the finance you need through factoring, you may be able to avoid that scenario.
6. If you do default on payments, you may end up earning a bad reputation in the industry. This could see staff and supplies refusing to work with the business and could harm your competitiveness.
7. As soon as you have received payment from the invoice factoring company, you will no longer have to worry about them. This could help you to plan for the future, rather than worrying about the past.
8. Having to chase debtors over payments could damage the relationship you have. By moving your invoices to a third party factoring company, you will be free to maintain a positive partnership.
9. The better the relationship you build with the factoring company, the lower the fees they charge will be. That means you can make even more savings within the company.
10. By letting cash flow problems escalate, you could be seriously harming the future for your company. Dealing with them swiftly through a specialist company could allow you to stay ahead of any problems.
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