How a Factoring Loan Can Help Your Business Grow

Does your company have a lot of sales and not a lot of cash at hand? This situation is very common if you allow your customers to pay their invoices in 30 to 60 days. As a matter of fact, most new and growing business have this challenge. They have a lot of money owed to them by clients, but little actual cash in hand.

Many business owners – and perhaps yourself – try to address this problem by demanding quicker payment from clients. Unfortunately, that seldom works. Both commercial and government clients pay on set schedules, and, waiting to be paid is part of the cost doing business. Others try to approach a bank looking for a business loan. Unfortunately, business loans are very hard to obtain. Most banks will ask for 3 years worth of proven financial statements before offering any business financing. It may appear as many businesses have few available financing options. Actually, there is a solution for this problem and it’s surprisingly easy to obtain.

Let’s say that instead of waiting 30 days to pay, your clients made you the following offer. They will pay you 80% upon receiving the goods/services and then pay the remaining 20% after 30 days. Would some, if not all, of your cash flow issues disappear? Factoring your invoices can offer you a similar proposition, without asking your clients for faster payment terms. You get an advance of 70% to 90% from the factoring company as soon as you deliver your product or service. You get the remainder, less a small fee, as soon as your customer pays for the invoice. Invoice factoring provides you with predictable cash flow and helps you ensure you can pay business expenses and employee salaries on time.

Factoring companies offer a number of advantages over conventional banks. Factoring financing lines are flexible and tied to your sales. That means that your financing facility increases as your sales increase. Furthermore, they are relatively easy to obtain and can be set up in about a week or so. The biggest requirement is that you have sales to good paying clients, such as reputable companies or government agencies.

The costs of factoring your invoices vary based on the size of your financing line and the credit quality of your customers. Generally you should expect to pay between 1.5% and 3.5% per month based on these criteria. Factoring invoices is one of the most effective strategies to stabilize your cash flow, providing you with a platform for strong growth.

About Commercial Capital LLC

Are you looking for factoring? Commercial Capital is a leading factoring company and offers factoring financing and purchase order financing. For more information, please call Marco Terry at (877) 300 3258.