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 the middle of 2021, a furniture company was suffering from supply chain issues. The company had a lot of orders on their books but were struggling to get the raw materials needed to complete the orders, especially as the prices increased. Though they collected a small deposit when the order non-refundable was placed, it did not cover the entire price of the supplies.  The company turned to invoice factoring to get the cash they needed to cover the cost of supplies.

The company was able to get approved for a loan quickly and received the money they needed within a few days. This allowed them to keep their business running and fulfill their orders. The loan did come with some fees, but it was worth it to the company in order to keep their doors open.

They were able to factor $160,000 of invoices which gave them the capital they needed to source the supplies at a higher price. This kept their business running and allowed them to avoid 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.

Overall, invoice factoring was a great option for this furniture company. It allowed them to get the cash they needed quickly and without any hassle. It also helped them to better manage their cash flow and avoid any penalties from late payments. If your business is facing a similar situation, invoice factoring could be a great option for you as well.

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