Invoice Factoring Factoring for Furniture
Author: Casey Marie Long
Date posted: 09.11.24

Invoice factoring is a type of financing that allows businesses to sell their outstanding invoices to a third-party lender in exchange for immediate cash. This can be a great option for businesses that are struggling to make ends meet or that need quick access to capital.

There are a few things that businesses need to keep in mind when considering invoice factoring. It is important to make sure that the invoices being sold are from creditworthy customers. This will ensure that the lender is able to get paid back in a timely manner. Businesses also need to be aware of the fees associated with invoice factoring. These can vary depending on the lender, but they typically range from 1-3% per month.

Despite the fees, invoice factoring can be a great way for businesses to get the cash they need quickly. In many cases, it can be the difference between keeping the lights on and shutting down. If you think your business might benefit from invoice factoring, be sure to talk to a lender about your options.

 

In mid-2021, a furniture company faced supply chain issues, with many pending orders and difficulty obtaining raw materials due to rising prices. The small non-refundable deposit collected upon order placement couldn’t cover the supply expenses. To address this, the company chose invoice factoring to secure the cash required for supplies.

The company quickly obtained loan approval and received the needed money within days. This enabled them to continue their business operations and meet order requirements. Though the loan incurred fees, it was worthwhile to keep their doors open.

By factoring $160,000 of invoices, they obtained the necessary capital to procure supplies at a higher price, ensuring their business continued smoothly and preventing any penalties or late fees from their customers.

The invoice factoring also helped them manage their cash flow better. They were able to see when payments were coming in and plan their expenses accordingly. This gave them the peace of mind that they wouldn’t run out of money and be unable to pay their bills.

Invoice factoring proved to be a great option for this furniture company. It enabled them to access the needed cash quickly and effortlessly, while also improving cash flow management and avoiding penalties from late payments. If your business encounters a similar situation, consider invoice factoring as a beneficial option for you too.

About The Author | Casey Marie Long

Casey has 12 years of technical writing experience. She is also a CPA and bookkeeper. Casey graduated from the University of St. Thomas (Minnesota) with a B.A. in mathematics and currently resides in San Diego, CA.

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