With the holiday season or high season upon you as a business owner are likely to have your hands full with orders pouring in and lots of work to do on the processing and completion front. Needless to say cash crunches might loom large on the horizon and make things seem a little bleak for you. Asking customers to pay an advance might be just one way of ensuring the availability of cash to meet working capital needs but then again the amount might not be enough.
In such a case, invoice finance could be just the solution to your problems on that front. Invoice factoring is a business procedure designed to help businesses experiencing cash flow problems gain access to cash without ending up with a huge interest burden. Factoring involves selling an invoice or freight bill, whose payment date is not due, to a finance company in return for instant cash. It has dual benefits for you and the factoring company…Factoring companies profit from the process by deducting a percentage of the invoice’s total value while you get instant cash.
Here’s how factoring can help you secure large orders during the holiday season or high season…
To meet large orders you will need more assets like machines for manufacturing, computers and printers for your office perhaps? Conversely you could also face a situation where assets such as printing machines or computers break down unexpectedly bringing work to a halt.
With invoice factoring it is now possible for your business to convert an invoice into money in order to ensure that it has enough cash to repair or replace the machines while ensuring that production of goods or provision of services is not disrupted.
Invoice factoring will also help you garner resources necessary for the acquisition of any new assets that you might require. This bodes well for businesses because it adds to its net worth.
Bad Debt Protection
While the holiday season means big orders or many orders it might also be that time when you as a small business owner walk in to that bad debts trap! Through invoice factoring you can convert an invoice into instant cash through recourse factoring to steer clear of bad debts.
The advantage is great as the financial company which purchases your invoice cannot demand a refund in case the client who gave you the invoice fails to remit payment to the financial company. This means considerable reduction of legal costs that you might have incurred had you filed a lawsuit against the company or individual who failed to pay up for the delivery of goods or services.
Fill in the Gaps of Your Working Capital Needs
Invoice factoring gives you access to working capital so you can run your company smoothly and efficiently while making commercially viable buying decisions, negotiating discounts and capitalizing on opportunities as arise.
The holiday season could be that time of the year when you need to be most in control of your business and invoice factoring could just be the tool you need to equip you at this time!