If you own your own business, you don't have to wait 30 days or more to get paid. Now, you can get the money within 24 hours.
When you own a small business that depends on customers paying on time, there may be times of the year when things are hard. Even if your business is doing well, you may not always be able to find the money you need to keep it going.
This can lead to some bad situations: if you pay your suppliers late, they won't be happy, and you might miss out on some good deals. Your employees will get upset if they don't get paid on time, which can cause them to work less and leave the company more often. So when you finally get paid and want to start doing things again, you might not have anyone to supply you or do the work.
You need money right away. What else could you do?
You can get more money into your business in a number of ways:
- Ask for a loan from the bank. In this situation, you might spend a lot of time only to find out that you don't qualify. Banks don't usually give money to small businesses first when they need loans.
- Use an overdraft. A solution that usually takes a lot of time and comes with a lot of rules that your business needs to follow. Overdrafts can be taken back at any time, which can make it hard for your business to grow.
- Put in your own money. This is usually not the best thing to do.
- Find a new investor if you're willing to give up a piece of your business.
The good news is that you don't have to wait. Setting up a deal with a factoring company is a good way to avoid these cash flow gaps and stay out of the vicious circle.
How to spend the money you earned?
If you think that all the money you've earned honestly is stuck in invoices that are still open or old, you're wrong. A factoring facility can really help you and your business get the cash it needs.
From the point of view of a factoring company, your invoices can be just as valuable as any other asset. Through factoring, you can use your biggest asset, your sales ledger, right now instead of waiting for your customers to pay you.
How do you send an invoice to a company that will pay it?
The steps are easy. You send an electronic copy of the bill you send to a customer to your factor. Then, in less than 24 hours, the factor gives you up to 90% of the value of the invoice. Most of the time, the factor is in charge of getting the money from your customer on the day the bill is due. After that step is done, the factor gives you the rest of the money, less a small fee for the service.
Outsourcing the sales ledger management function can be very helpful for small to medium-sized businesses because it takes away the need to deal with invoices and collections. By hiring someone else to do that part, you can get away from it and focus on building relationships with your customers and making sales.
These companies also offer protection against bad debts, which usually covers up to 90% of any customer's outstanding balance, up to a certain limit.
What's the point of factoring?
Factoring is a solution that you can use in addition to your regular banking services. You should look for the best way for your business to use factoring.
Here are a few reasons why you should think about factoring as another way to get cash:
Because if you give your customers more time to pay, you'll never run out of money again.
- Because the building can expand as your business grows
- Because the building will make it possible for you to take advantage of opportunities. for your business to move forward
- Because you want to have an advantage over your competitors.
- Because you can grow your business at the right rate without worrying about how long it takes your customers to pay you.
Factoring is a financial tool that lets you get cash advances by capitalising your invoices and makes your work easier at the same time.
