Tony Neglia
President
I am often asked how factoring can help a business. While every situation is unique and only the owner can decide what is best for his or her company, it is helpful to consider the question: What would you be able to accomplish if your invoices were paid within 24 hours?
For many enterprises, payroll is frequently the largest expense. You might complete a job for a customer but then have to wait 30, 45 or even 60 days for payment to arrive. In the meantime, your loyal employees or contractors must be paid every week, whether or not you have received payment. This creates a cash flow strain. In addition-if your business is in the fortunate position of growing and hiring employees-cash flow is under even more pressure since the income generated by your new employees will not produce cash for some time.
For other companies, inventory or supplies may be their largest expense. In these cases, the cost of fulfilling orders can quickly deplete cash. Again, if your business is in a state of growth, cash flow can be strained further by the need to purchase additional supplies.
However; if you have a factoring arrangement in place, you will always know exactly when your cash will arrive. In many cases, it will be the day (or day after) your invoice is submitted to your customer. This eliminates the worry of wondering when you’ll be paid.
The ability to factor your invoices will free up the cash in your receivables allowing your company to take on additional work, fulfill new orders, offer net-30 day terms to customers who want them, gain a competitive advantage over your competition, and grow your business!