One of the Best Credit Options for Small and Mid Sized Businesses
Invoice finance is one of the best financial solutions, which is mainly used to deliver the tied up money in the unused accounts. This method is particularly used in both medium sized and small sized enterprises due to its effectiveness. It would be exceedingly hard for any person to wait for the loan from a bank during cash crunch times. And, therefore, this type of finance is the best.
Benefits of Account Receivable Factoring:
Here are some of the advantages which medium sized or small business can expect from the account receivable factoring:
- As we discussed earlier the main benefit of this financial instrument was the fast fundraising option, most of the factoring institutes which are offering this service will pay around 85% of the invoice upfront directly within 24hours.
- You won't have to worry if you are not eligible for the traditional debt finance. This is the reason why people usually opt for invoice finance due to its effectiveness. In fact, it is one of the perfect quick fix solutions.
- You can use your required amount of money from the invoice finance in any way you wish. There are absolutely no restrictions, whereas there are some restrictions to use the funds in the traditional debt financing.
- You can avoid falling into the trap of debt in this case. An account receivable factoring will be extremely useful to get cash in advance.
- You can readily clear all your bills and debts by using this financial solution. Thus, you can see lots of improvement in your financial conditions.
- This financial solution can be easily accessed by the people who are financially stable. It entirely depends on your credit report.
- Most of The Factors will only charge a reasonable fee, like 5 to 10% of your total invoice.
- The invoice finance would be always your best choice to avoid the hassle of financial crunch.
- It will be your best choice if you want to spend money on expanding a small business, it will make your life much easier by opting for this innovative financial solution.
History of factoring
The factoring of invoices initially started in the USA, and soon it spread to UK. It was used for financial trading in the olden days, in America, the practice had spread throughout the world in the past few years. It is usually because the street banks are not interested in offering instant credit facilities to both medium and small business.
Usually the name of factor will be always printed on an invoice; thus the customers can pay directly to the factoring company. The percentage of advance which you receive may vary from one person to the other. This is due to variations in the client’s economic conditions and the quality, of products or services he provides.
If you need a small amount of money, then you could check out the possibility of fast approval car title loans. However, invoice factoring is the ideal solution for raising money for your business needs.
Working capital plays a pivotal role in any kind of business. In fact, no business can meet its daily liabilities without having sufficient working capital. In the past, the street banks use to support the working capital through debentures, or by taking external protection from large scale businesses. However, they usually do not provide any working capital to the SME markets.
Now, the invoice financing had changed the whole trend. It is offering ‘work capital’ for the SME markets too. This is why most of the businesses are showing interest in invoice financing these days.
Dale Buffet is an expert writer and his posts on business related topics are appreciated and liked by most of our readers. He usually writes about different ways to generate quick funds.