Maintain a Steady Cash Flow for Your Florida Business With Maven Financial's Comprehensive Invoice Factoring Services
Slow paying customers can be one of the biggest frustrations for business owners especially when they have to wait for 30, 60, or 90 days for the payment to arrive. This long waiting period can result in serious cash flow constraints. In turn, this can compromise important payments like bills and payroll as well as hinder business growth opportunities like expansions, hiring new staff, or investing in new technology or equipment. In these instances, invoice factoring can be the solution to your problems.
How Does Invoice Factoring Work?
Invoice factoring allows small business owners to skip the weeks of waiting and get cash advances on their accounts receivables. You get paid faster and you get a more predictable cash flow that allows your operations to run smoothly from month to month.
The way it works is that you agree to collateralize a percentage of your invoices for a loan. The factoring company will then give you an advance of commonly 85% of the total value of your invoices. The remaining 15% is held back until your customers pay off their invoices.
From the 15%, various fees are collected including a lender’s fee and a factor’s fee which depends on how long it takes your customer to pay. This is essentially the price you’re paying for getting your cash now rather than waiting for it.
Invoice Factoring vs Invoice Discounting
Invoice factoring and invoice discounting are both types of asset-based financing covered by the umbrella term “Invoice Financing.” The key difference lies in the control of the invoice collection.
Invoice discounting allows you to hold full control of your invoice collection and sales ledger. On the other hand, with invoice factoring, the factoring company is responsible for collecting debts and invoices. They’ll be the ones chasing the customers themselves to settle the invoice.
Pros of Getting Invoice Factoring
The primary benefit of this loan is getting rid of the waiting period and getting a quick, safe source of cash to allow your business to run smoothly. Factoring also relieves you of the task of chasing late payments and debts. With this, you won’t have to add slow-paying customers and late payments to your list of worries and you can concentrate instead on the more essential parts of running your business.
Qualifying for Invoice Factoring in Florida
Invoice factoring has one of the fastest and simplest application processes. Lenders won’t care much for your time in business, revenue, or profitability. The most important part of the process is your invoices itself. Some lenders will also take a look at your credit report. These, in addition to your creditworthiness, will determine the maximum amount you can qualify for.