What happens to your business when customers are slow to pay for goods they acquire? Do you get cash flow problems? Well, you don’t have to slow down your business’s operation when such issues happen. Especially now that invoice discount are attractive to almost any type of business, maintaining a stable cash flow in your business is all possible. Read below however to learn more about invoice discount as an alternative source of instant cash.
Technically, invoice discount are very different from loans. This means they work on totally different rules from the normal financial sources you are used to. They also have their own set of pros and cons. Despite these, this method of acquiring financial assistance is appealing to almost every B2C or B2B business. Usually, you sell your current invoice to a factoring company at a discounted price and in exchange get cash instantly. The biggest advantage here is getting the money instantly. With money, you continue to run the business normally while maintaining a great relationship with all customers.
What if you credit score is great, aren’t bank loans a better option? Certainly yes, banks are another accepted financier to consider when in need of cash. And if your ideal business can process your money in the quickest time possible, you would avoid the high commissions that come with invoice discount. However, not all businesses can navigate through the hurdles that come before a loan. Startups especially face challenges getting loans from banks, and particularly those with few assets. And even if the businesses get the loans, it is often too low for them to run their normal operations accordingly.
On the contrary, there are few if any prerequisites that come before getting money from a factoring company. In addition, there are no hassles of visiting the financier and having to place collateral that may in the end not being sufficient to get you the money you need. Instead, a good factoring company concentrates on the quality of your invoice and probably on the potential you have to determine if you should get their assistance. In most cases, you qualify for the money as long as your customers are credit worthy. In the end, you get enough money to pay employees, pay your own bills and manage inventory with no hiccups at all.
To learn more about invoice factors, read what experts have to say on inspiredfactoring.co.uk.