Guide to Invoice Factoring for Small Businesses
By: Bobby Chacko
When considering the day-to-day operations of small businesses, reasonable invoice timeframes matter a great deal in the long-term success of the business itself. In many cases, however, the cash flow and capital needed to run a small business successfully simply cannot depend on typical invoice payment timeframes.
When it comes to small or medium-sized businesses, there are a set of generally understood invoicing payment terms known as Net 30. Under these terms, businesses can usually expect clients to pay off invoices within 30 days. However, these payment dates fluctuate from company to company, and payment terms can be on a Net 60 or even a Net 90 payment schedule.
That can be bad news for small businesses. So what happens when your small business needs consistent revenue in order to function properly? Invoice factoring services can help.
What is Invoice Factoring?
Large-sized companies and corporations usually have plenty of options to work with when they experience cash flow issues. In today’s financial climate, small businesses rarely have those same options. Banks are reluctant to lend money to new businesses with little existing income or assets.
Invoice factoring enables you to secure timely cash payments when you need them the most by “selling” your invoices for almost immediate payment. This allows you to acquire the necessary funds for your business to thrive without accumulating new debt.
Services like these are easy and inexpensive to use and are an invaluable tool and lifeline for small businesses like yours.
Do I Qualify for Small Business Invoice Factoring?
Small businesses regularly depend on invoice factoring services and alternative financial lenders to maintain healthy levels of working capital, but how do you know if you qualify?
Perhaps one of the greatest things about factoring your invoices is that these services tend to be quite reasonable when determining approval.
These services understand that new businesses usually take on some considerable debt so their credit may be less than pristine. Taking these circumstances into account, they often look to your customers’ credit more than your own to make their payment advancing decisions.
After all, they’re purchasing your invoices from you with the intention to collect from your clients once they’re paid. So if your client is a reputable business that has simply taken the full 30 days to pay, you probably already qualify for invoice factoring.
Which Invoice Factoring Service is Right For Your Small Business?
Every invoice factoring service operates in its own unique way and finding the right service for your small business can require a bit of research. However, certain services are clear standouts.
Companies like Fairexpay allow you to manage and expedite your business payments promptly and seamlessly within their platform.
Many invoice factoring services favor operating domestically, but companies like Fairexpay offer payments for over 200 countries around the world.
Additionally, Fairexpay offers transparent and reasonable fees with no hidden extra costs. In most cases, you can expect to receive 80%-100% of your total invoice amount in your bank within 24 hours.
