Benefits of Account Receivable Factoring
Does waiting for payment from your clients stress you out? Many people experience the same thing. Sometimes an invoice takes a long time to process. Clients may even prolong it due to certain issues. Even waiting for an an on-time one can still be painful especially when our cash balance is terrible.
As a training contractor specializing in hoteliers, late payment is something I get really used to. Sometimes, a hotel can be so busy that their accounting department needs one month to turn my invoice into cash. During the holiday season, this gets even worse. As a result, I experience difficulties in keeping my business going. I still have to pay my trainers, by materials for incoming sessions and feed myself. My obligations cannot wait. Meanwhile, rushing the clients to pay quickly is usually not possible.
What is my solution? Instead of getting some loans, I turn to account receivable factoring companies.
The biggest benefit of factoring receivables is that we do not have a debt to repay so our credit score is not affected. We merely leverage unpaid invoices into cash. It is our cash to begin with. We just receive it more quickly than the payment date. Since it doesn’t count as debt, we will still be able to get other business loans if we want to.
The second benefit is the simplicity of the process. The paperwork is really not complicated. The process is easy and straightforward. Since it is not a loan, we don’t need collateral either. As a result, we can do it without any additional stress.
The last benefit is the flexible nature of the factoring. We only use this loan when we need it. Therefore, it is better than a credit line. The funds that we are able to get is not determined by our past credit history, but by what we have now. We don’t have to do it regularly and there is no push on the maximum and minimum amount. It also offers better rates than credit card options.