The success of a company is certain to relate to the ability to manage and coordinate the day-to-day finances. If a company starts to experience delays in receiving due payments, this is likely to result in a lot of stress and financial difficulties. A short-term solution to help with solving the credit issues is to use the services provided by the accounts receivable factoring companies. They are able to offer a range of advantages when it comes to managing the incoming earnings. Below are several areas where the factoring companies are able to help:
Unlock working capital – A quality aspect of the accounts receivables financing services is the ability to provide a cash advance in exchange for the open invoices that haven’t yet been paid by your clients. For example if you have several invoices that are due for payment in the near future, you are able to effectively pass these invoices on to the factoring company in exchange for a certain percentage of the total value. By taking this step you are able to get instant cash injection for helping to run the business in times of short-term cash issues.
Many of the factoring services are able to offer an instant 60% to 90% advance of total amount due on the open invoices. Even though you would receive more if you waited for the client to pay the invoice in full, this service is certain to benefit those companies that aren’t able to wait the 30 to 60 days that is permitted for certain invoices to be paid. And once the factoring company receives the payment due on the invoices, you will get the remaining balance that is due, less a certain fee that was agreed at the time of arranging the factoring agreement.
Helps with growing a business – In order that a business is able to continue to expand and taking on new orders, it will be highly beneficial to have early access to funds that are due. It can be difficult for a business to see significant growth, especially in those situations where the orders are available but you aren’t getting paid for the work that has been completed. To avoid turning fresh business away, an accounts receivable factoring service is able to offer a perfect solution to help with making the income from open invoices more consistent. A start-up business is certain to benefit from using this type of service, especially when you are still waiting for payment on existing orders to be made before being able to take on fresh work.