If you own a business, you probably have some clients who take their sweet time paying. It's all good - until you have so many unpaid invoices, you can't fund day-to-day operations. Nobody wants to turn away business. So what do you do when you've got outstanding invoices and your credit line is maxed? Should you take on a partner? Solicit investors? Issue convertible T-bonds? If you're not a jet setting international finance guru, you might consider factoring.
Invoice factoring, also known as accounts-receivable funding, is a highly cost-effective method of accelerating cash flows to fund business operations. Here are three things you should know about factoring - without the accounting mumbo jumbo.
1. Invoice factoring is not a loan. In a factoring arrangement, you sell your outstanding invoices and receive immediate cash. The purchaser collects on your invoices when they're due and charges you a small fee. You can factor as little or as much as you want in order to maintain adequate working capital. With factoring, you avoid debt, liabilities, and long-term commitments.
2. It improves your cash flow. For over 2,000 years, factoring has been used to improve business operations and reduce payment times. (No joke, the ancient Mesopotamians used factoring!) By turning unpaid invoices into same-day cash, factoring lets entrepreneurs maintain enough capital to accept larger clients, hire more people, and grow their businesses.
3. Factoring is suitable for numerous industries. Whether you’re running a startup in your parents' garage, or an established business of 25 years, factoring can fund your growth. If you have credit-worthy commercial customers but lack the track record required by lenders, then factoring may be the solution you're looking for.
At TBS Capital Funding, we provide simple, flexible cash flow solutions for companies across a variety of industries. If waiting around for invoices to be paid doesn't work for you, let TBS provide same-day cash to fund your operations. Ready to stop worrying about invoices and start focusing on growth? You don't have to be an economic whiz kid. You just need to contact TBS Capital Funding.