Ask any business owner, especially if you’re a new one, you’re always thinking of ways to ensure your business is well-maintained. Let’s be real, starting a business is never easy, and maintaining it is a whole different thing. Hence, the business owner needs to make sure to consider every little thing that could happen.

One of the things is to ensure your clients can pay for your goods and services. It’s good if they’re able to make payments smoothly and timely. Unfortunately, some companies might not be able to pay you on time due to unforeseen circumstances or complications in the payment process. This is where invoice factoring comes to play.

What are the benefits of invoice factoring? Read on below to find out!

1. Immediate access to cash

In short, you’ll get paid immediately. Invoice factoring offers you a facility to free up funds tied up with the unpaid customer. It provides cash advances on your unpaid or outstanding invoices, hence there is no waiting for months or weeks for the payment. Once you’ve signed up for invoice factoring, the factoring company will advance up to 80% of the invoice value to you. Once the invoice is paid by your customer, you’ll receive the remaining 20% of the invoice amount (minus fees).

2. No collateral is needed and hassle-free approval

Here’s the thing, most businesses didn’t start with a pristine track record and because of that, it is hard to get bank loans.

Invoice factoring can be an excellent alternative. You do not need to have a perfect business credit score, you do not need to have a strong balance sheet, and you don’t even need to have collateral. Factoring companies are more interested in your customer’s creditworthiness. Gaining approval for invoice factoring is usually fast and hassle-free.

3. Increase sales and profits

With invoice financing, you can strengthen your company’s financial capabilities, capitalize on growth opportunities, and take on larger contracts without getting stretched too thin. As a small business owner, opportunities don’t come easy and not without a price. Sometimes, you might not be able to take on new projects as you’re not financially sufficient to get the project done.

Therefore, invoice factoring can help – it allows you to improve the company’s financial health and take advantage of opportunities as they arise.

You would also have more control over your finances with quick cash flow. This is because you don’t have to worry about a dip in available cash. The confidence of knowing you’ll have money to spend on inventory and other expenses.  When you don’t have to worry about money, it allows you to concentrate on what matters most to your business – growth, and expansion which gives you the ability to plan your business activities with more precision, resulting in increased sales and profits.

4. Flexible terms and do not create debts

Besides that, invoice factoring is a simple and effective way of generating cash flow. This is because it’s not adding financial liabilities to your business. It’s not lending or borrowing – you are not tied into a long-term contract such as a term loan, and you can choose which of your invoices you wish to factor.

Unlike business loans, which add to your debt burden and underpin your balance sheet, invoice factoring does not create debts. This is just an off-balance sheet financing solution for businesses looking to improve their cash flow. This way, you can keep your balance sheet clean and free from liabilities while accessing the funds you need!

5. Manage your account receivables and allow you to focus on your business

The factoring company will help manage your account receivables i.e., follow up on the collection of invoice payments. As a result, you can just focus on your next job or project without stressing about the previous ones – out of sight, out of mind (until you’re getting paid!).

As your business grows, and you expand your sales channels, you may find that it becomes harder to make sure that payment is received on time. Receiving a large number of invoices when you’re busy with other work is the last thing you want to be dealing with, but if you have invoice factoring in place, this is something that someone else deals with for you.

All you have to do is submit a simple application and wait for approved funds to start pouring in.

Interested? Don’t waste your time anymore.

Improve your company’s finances by applying invoice factoring from Planworth – more flexible, easy to use, and immediately accessible. Set up your free consultation here. Feel free to contact us at +6016 216 2743 for any funding enquiries, or +603 2166 2728 for general enquiries. Get in touch with us now!


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