In a previous blog, we discussed some of the most damaging myths about factoring that exist in professional circles and on the internet. These myths included the idea that only startups need factoring, that all factoring finance companies are the same, and that it’s more costly than using a traditional bank loan. As promised, we’d like to continue this discussion with three more myths about factoring that sometimes prevent companies from taking advantage of the best financial solution for their needs.
Commercial Finance Group is proud to have provided custom lending solutions to many different types of companies across America. We’re dedicated to not only maintaining our reputation as a reputable factoring company, but educating business owners and financial professionals about the true value of factoring.
Keep reading to learn more about the most popular factoring finance myths and contact The Commercial Finance Group for help today.
Worried That Factoring Is Untested And Unsafe?
Before we dive into our myths, let’s get one thing out of the way: factoring isn’t some newfangled type of financing that emerged overnight. “The seeds of the modern factoring industry were sown in the 15th century, that hectic era of Joan of Arc, the birth of the Ottoman Empire, the War of the Roses, and–who could forget?–Columbus’ discovery of America”? reports Alice Magos for Biz Filings. Finding a way to capitalize on money that’s owed to your business but not yet paid is a time-tested technique that has helped entrepreneurs for centuries and it can help you too.
Myth #4: Factoring Is “All Or Nothing”
Truth: Not All Invoices Must Be Factored
Entrepreneurs are independent people. They have the guts to do things their own way, even when it’s harder or not successful at first. Thus, entrepreneurs tend to shy away from situations that restrict the things that they can do with their own business operations. One factoring myth that keeps small business owners from taking advantage of our lending solutions is the idea that every single one of your invoices has to be offered up for factoring. While most factoring companies will require a steady stream of invoices from your business, the “all or nothing” approach is uncommon. In most cases, your factor will want to pick and choose the most promising invoices from certain customers.
Myth #5: Factoring Is Only Ever A Last Resort
Truth: Factoring Can Help You Avoid Cash Flow Problems
It’s true that factoring is a beneficial financial tool for companies who are struggling. When cash flow issues have backed you into a corner and traditional loans aren’t an option, factoring can get you over the hump. However, the large majority of businesses that seek factoring are simply looking for a way to finance their growth. If you’re experiencing rapid success and want to capitalize on it quickly, we can help.
Myth #6: Factoring Contracts Are Designed To Trap You
Truth: Reputable Factors Provide Flexibility
Responsible business owners know that you should never sign a contract without fully understanding what it means for the present and future of your company. Business owners who believe the myth that all factoring contracts are deceitful and restrictive may be avoiding the best possible solution for the company without even knowing it. Reputable factoring companies are concerned with creating a mutually beneficial situation, which means building some kind of flexibility into their contracts. Fees and rates may be adjustable, and termination or buyout costs are moderate, and most importantly, contracts remain short-term.
Hundreds Of Companies Turn To CFG For Factoring Finance
That completes our discussion of the most popular myths about factoring, but we’re sure there are still some floating around out there. If you have concerns about whether or not we can provide the cash flow solutions you need, please contact us. We’ll take the time to thoroughly review your company’s financial performance and discuss the pros and cons of each option. We’re here to help you succeed and we strive to maintain a superior level of customer service and professionalism.
We understand the power of small to mid-sized businesses and the way that they can impact our economy in a positive way, and we want to help you succeed through our custom lending solutions. We look forward to the honor of working with you. Apply now.
