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7 Ways You Can Benefit from Factoring Receivables

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Struggling to manage cash flow in your business? If you’re like many business owners, this is probably your biggest challenge since you need cash to pay your bills, negotiate discounts and fund growth. The sad reality is that most of your cash might be tied up in accounts receivables. Factoring receivables allows you to free up your cash by funding an immediate cash payment on the invoice amount. Sounds like something you would need? Here are some of the advantages of factoring receivables.

  1. Access Your Cash Faster
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You don’t have to wait months on end for your customers to pay you. Once an invoice has been approved, you will be able to access your cash within 48 hours. The initial set up only takes a maximum of 10 days and thereafter you will be able to get financing in a fast and seamless manner. Compared to a bank loan, which could take weeks or months to approve, invoice factoring is more convenient.

  1. Debt Free Cash Flow
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You do not need to add liabilities to your balance sheet to free up your cash flow.  You won’t need to make monthly loan repayments or incur hefty interest rates.

  1. Flexibility
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Factoring receivables allows you to get into short-term contracts without minimums or maximums. Choose how often and what invoices you want to factor.  Moreover, the plans are flexible enough to grow with the needs of your business. You will be able to access more fu8nding as your sales grow.

  1. Reasonable Fees
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While many business owners have been skeptical about factoring due to the fees charged, the costs have come down markedly over the years. Today, you can get 95% financing for only 1.5%.  Nonetheless, fees vary widely depending on the industry you are in, how long your customers take to pay and your creditworthiness, and the number of invoices you will be factoring. Talk to a factoring receivables company to get an idea of the fees you will incur.

  1. You’re in Control
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If you opt to take out a loan you must spend it on what you indicated in the application. This is not the case with factoring. You can use the money in any way you want. You won’t be tied to purchasing equipment or other assets.

  1. No More Stress
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Following up on customers for payments is often a stressful affair especially if you have obligations to meet. Factoring receivables allows you to pay all your bills in time, remit taxes when they are due and avoid late fees or damaged credit. Let someone else follow up on customers for you. This is one of the major advantages of factoring receivables

  1. Grow Your Business
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Business growth is heavily reliant of cash. You need money to buy equipment, hire employees and fund marketing campaigns. You also need cash to negotiate bulk and early payment discounts with suppliers. Factoring can help to make savings if it is well thought out and structured. The fees charged by the factoring company might be negligible compared to the savings you make.

 

 

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