The early collection of the debt amount can be of great help for an SME. And factoring makes it possible. This short-term working capital financing alternative, which also includes additional services such as business advice and information on the creditworthiness of your clients, can be adapted to any type of business. In fact, it is an option that is gaining ground.
What are the advantages of factoring?
Factoring can be a valuable asset to your B2B strategy, providing benefits to small business owners or managers of large operations. Not only is it more accessible than traditional loans, it also provides other options.
Here are some advantages of Factoring:
– Quick cash for your business: Probably the most obvious reason is that factoring provides fast cash to keep processes running smoothly. Among the legitimate reasons a business owner should have access to fast cash are:
- Payment of payroll.
- Settlement of monthly bills.
- Bring in fresh inventory.
- Expand to a new location.
In general, having cash on hand is saying “YES” to a new opportunity, rather than letting it go by waiting for the funds to arrive..
– Easier approval than a traditional loan: Factoring companies pay more attention to the credit ratings of their customers. Therefore, a faulty or non-existent record will not matter as much when you apply. Unlike traditional loans that are practically out of the reach of young companies due to their limited guarantees and short financial history.
– More flexibility for your customers: Higher cash flow for your business means you can allow customers a little more leeway. Instead of demanding immediate payment, you can give them a month or more to complete the invoice, without worrying about the strain it will put on your own business.
– Limited risk to you: Factoring does not normally require collateral. Therefore, you will not have to worry about the seizure of valuable assets if the customer does not pay. Unlike a traditional loan.
– Help manage overdrafts: Paying the company’s own fees without running the risk of breaching financial commitments and meeting the minimum required balances in your bank account are benefits from factoring.
– Highly accessible: After initially setting up an account with a factoring company, you should be able to receive cash within hours of submitting the invoice. Today, you can generally manage the process entirely online.
– Improve customer relationships: One of the administrative headaches is collection. Getting rid of this task is simple, by allowing a company to manage these accounts receivable, saving time.So, along with renewed financial flexibility, you can focus on the other aspects of your business, including building stronger relationships with your clients.At Efinti, we understand from experience that taking advantage of the benefits of factoring your business can grow without having to resort to a traditional loan.