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How does invoice factoring work

Small business solutions

If you own a small business, you know that cash flow can sometimes be a challenging issue. This is especially true for start-up companies with new clients. New businesses often find it difficult to operate if they have clients who cannot pay upfront for products or services rendered. These companies must rely on invoicing customers for 30, 60, or sometimes even 90 days to receive full payment for services and/or products. This can result in operating and cash flow challenges. The solution to this challenge is to acquire the services of a company that can provide invoice factoring for unpaid customer accounts.

How does invoice factoring work

Cash flow issues resolved immediately

Many small companies no longer have to worry about the cost of waiting to receive invoice payments from their customers. They can simply allow this type of company to purchase unpaid invoices from them and receive immediate payment from their clients. This allows the company to continue operating without waiting for all of its customers to pay the balance of their invoices. What a wonderful concept! Companies no longer have to wait for clients to pay the complete invoice bill before they receive payment in full allowing companies to have more immediate working capital and cash flow. Long gone are the days of waiting 30 to 90 days to receive complete full payment from your invoices for services and products rendered. These wonderful companies allow you to sell those invoices for a small upfront cost and low per invoice fee without complicated loans from banks with restricting guidelines. You can simply have the company purchase your invoices and receive money immediately.

No Qualifying Necessary

Companies do not have to qualify for this service. The company simply qualifies the client. The company will then purchase the invoice and pay the company up to 96% of the face value of the balance. There is usually a small fee per invoice as well. The invoice factoring company will service the loan per invoice and wait for payment in full. This allows many small companies the flexibility of being able to continue operating without having to sacrifice business due to cash flow difficulties. For a startup company, this could be a very good solution to operating expenses and other cash flow related issues. In previous years it would sometimes take clients 30, 60, or even 90 days to pay their invoice balance in full.

A better way to a brighter future for small businesses

For small companies without much capital to work on this can sometimes be the difference between having to close their company doors or remaining in business. Many small companies will welcome this new and innovating concept as companies in times past did not have this option and sometimes had to resort to closing their business because clients were unable to pay their invoices in full in a timely manner. I can only imagine the many companies that were forced to close their doors unnecessarily but did not have options available to them that we now have. Many companies were only given the option of restricting bank guidelines which they could not adhere to forcing them to shut down businesses which could have continued to operate if this service were available to them.

Many businesses can now generate more business and charge clients higher revenues knowing their invoices can be paid immediately. This gives them the freedom and liberty to operate in new and better ways unavailable in previous generations. Many companies can generate cash flow immediately for their businesses to continue to flourish in challenging economic environments. What a great solution for small company cash flow problems.

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