The Top Benefits of Factoring Receivables

Some business owners are hesitant to use factoring; however, this is often due to the banking community’s stigma attached to this form of financing. The truth is that factoring offers more than a few benefits. Keep reading to learn what these are.

Eliminate Bad Debt

With a non-recourse factor, you have a financial tool that assumes the risk associated with bad debt for your business. It allows you to eliminate the cost from your balance sheet.

Professional Collection Services

You have a professional service that will collect your receivables on your behalf with a good factor. However, the overhead related to collecting debts is eliminated.

Early Payment and Volume Discounts

Factoring pays you in advance for your receivables. Because of this, your business achieves improved cash flow, which puts you in a position to take advantage of the discounts available that can improve your bottom line.

No Debt Incurred

Factoring isn’t a loan. Because of this, it means you don’t incur any debt. No additional debt improves your balance sheet and makes it easier to get other types of financing to sell your business.

Fast and Easy

The application needed to establish a factoring relationship is much faster and easier to complete than other financing options. You don’t have to submit documentation required for other loans, such as projections, business plans, financial statements, or tax returns.

No Personal Guarantees

The company principals don’t have to personally guarantee the repayment of the funding you receive. In most cases, they must provide a guarantee against disputes or fraud, but not against the inability a customer has to pay.

Faster Payment for Invoices

Usually, factors report payment experiences to credit agencies. If a debtor is aware of this, they will make sure to pay what is owed because they don’t want their credit impacted.

Credit Screening

Factors provide you with credit information on any potential or new customers. With this information, you can make better decisions regarding who you extend credit.

Finding the Right Factoring Partner

Finding the best factoring partner is important. This company will have a huge impact on your business and bottom line, so taking the time to find a reputable and experienced company is recommended. It may be helpful to speak to other business owners who have used the services of a factoring company in the past. This information will help you find the right partner for your business.

Seek Expert Assistance

Reach out to Falcon Capital Funding today to learn more about our business financing solutions.