If you are worried about your business’ cash flow spiraling down, then maybe it’s the right time to make a major decision to improve the situation. Low cash reserves are not indicative of your organization’s true financial health. Rather, it sometimes happens when a company is growing fast, and in the process, creates invoices for receiving payments from its customers. These invoiced payments are not always received immediately. Usually, there are invoice terms such as 15, 30, 45 days or more that are provided to the customers. Often, these payment terms are extended for the customers’ convenience. During this period, an urgent requirement for cash may crop up. Your business may need money to pay your employees’ salaries, to pay the rent or the electrical bill, or for buying new equipment and other expenses. In such a critical situation, conventional lending could be get difficult to get. For a solution, you can turn to professional invoice factoring companies that can fund your business with immediate cash after buying your receivables or invoices.
As a business owner you would surely want a company that will provide cash in quick time, pay personal attention to your financial needs, and deal with you in a professional and empathetic manner. Furthermore, you also want to be sure that the A/R factoring company is a principle funding company, and not a broker. Principle invoice factoring companies are financially strong and use their own capital for direct funding that makes the processing fast and efficient. The company will help you expedite funding arrangements by purchasing your invoices at a discounted rate. You will receive the required cash that is equivalent to the face value of the invoices you sell. You can factor single or multiple invoices as and when needed. So, this could be a great funding option for your business even amidst the gloomy economy and indifferent credit market.
While choosing an A/R financing company, you can consider the following factors:
1.Quick Turnaround Time
During urgent cash requirement, even an additional day taken for processing can make or break a situation. So, the company’s services should be highly responsive to meet your instant financial needs. Ideally, an efficient company takes about 4 days to approve funds, and for subsequent applications, it can provide funding within 24 hours.
The company you choose should be reliable so that your cash flow issue can be solved on an urgent basis. It should be able to complete the invoice verification process, credit approval, processing invoices, and remittance of funds quickly and efficiently.
3.Amount of Cash Advance
When you are desperately looking for funds to pay off your business’ short term obligations, you need maximum of cash as an advance. If you have a current and valid invoice, a good company can pay up to 90% of invoice value in advance.
You should feel comfortable dealing with your chosen company. Convenience provided by the company can lead to a long term business relationship. A good company provides flexibility considering your business situation, and that can save you from delays and the hassles of processing.
5.Simple Application Process
While factoring, the last thing you want is a long and complex application process. Make sure the company is not charging any fees or penalties, except the discount fee. Also, there should not be any long term contracts to bind you.
Before availing such services, you can check for online information related to factoring or call up a relevant company for more details. This will help you clear your doubts before making the final move.