Have you ever noticed that your largest contracts are with companies that want 60-day net or 90-day net invoicing? You just can say no to those big orders, but while you are waiting for their long-term invoicing to come due, where do you get the money for paying bills, re-ordering raw materials, paying your employees, and restocking for your next big orders?
Many business owners do not realize that even though banks consider unpaid invoices with 60-day to 90-day net terms a negative asset, small to large businesses can leverage their unpaid invoices as positive assets for continuous cash flow to keep bills paid on time and meet the overtime payroll.
How Can Invoice Factoring Consistently Improve Cash Flow?
First understand that this is not a loan, there is a small fee for the cash advance, but an invoice factoring company is not like a back where you have one sum of money, but for months afterwards you now have an added loan payment in addition to everything else.
No, using the invoice factoring system, you get an advance of up to 90 percent of the money coming to you through invoice. The advance company will take a fee from the remaining 10 percent once your big order customers pay off their invoices, and then return the balance to your business account. There is really not catch, you control which invoices to add to your monthly cash flow option, and if you decide you want to remove a client invoice for some reason, that happens right away.
There are various invoice factoring account types, you can use your account for a one-time deal, on a regular monthly basis or as needed. There is no regulations on what you can spend the invoicing cash on, it’s the money your business was going to receive anyway so you have total control.
Large companies and corporations have been doing this for many decades, now small and medium businesses have the benefits as well. Once you are seeing your bills paid on time, and you can order your supplies in bulk to save money, you may want to build your business, add new customers, and provide staff development and training. Step by step, you will see your company building up with the use of Invoice Factoring advantages.
- Upgrade your enterprise system so your employees have more time for customer service and for updating social media contacts.
- Outsource an SEO marketing firm to help you beef up your marketing plan to reach out to new prospective clients.
- Modernize your equipment and machinery so you can handle larger orders more time-efficiently.
- Purchase supplies in larger quantities to get reduced pricing and be sure you do run out of materials.
- Set up a Health Plan and IRA for your employees.
The key to optimizing your cash flow is to find a reliable, trustworthy invoice factoring company to make sure your business can grow over time.