You probably know by now that invoice factoring is one of the best and most effective ways in which small and medium-sized businesses ease some of the problems they have with cash flow. While you may understand the basics of factoring, that might be all you really know about the service. In this post, we would like to give you some information that you may not know otherwise. Continue reading below to learn more about factoring from the experts at The Commercial Finance Group.
Factoring Isn’t A Loan
Plain and simple, this is the most common misconception we can think of when it comes to invoice factoring. Factoring is not a loan. People who say that it is are completely incorrect as there is no lending involved in factoring at all. When a factoring company buys your invoice, they are doing just that, buying it. This is, of course, followed by the factoring company collecting the money that is owed on the invoice on their own. Therefore, factoring is in no way a loan and is actually just a simple sales transaction.
Your Customers Matter More Than Your Credit Rating
There are many reasons that SMBs like to use invoice factoring services. However, one of the main reasons is due to how little your credit really matters when you are in need of factoring. That’s right; factoring is based on how worthy the credit of a business’s customers are, rather than the credit score of the business itself.
Factoring Will Get You On The Fast Track
People also ask us quite often if invoice factoring is really that much faster than obtaining lending from a bank. The answer is absolutely yes. For the most part, everyone is familiar with how horrible of a process lending from a bank can be. It’s long, confusing, and frustrating to say the least. Factoring, in contrast, can be done very quickly. The majority of the time, this is within a matter of a few days.
Factoring Also Just Happens To Save You A Ton Of Time
Not only will factoring help you to avoid the lengthy bank lending process, but it will also save you time in other ways. Since the factoring company will be paying you for your sale ledger upfront, you no longer have to worry about waiting anywhere from one to three months to be paid by your clients. This is the key to why factoring solves cash flow problems.
You Wouldn’t Believe How Many Businesses Use Factoring
Plain and simple, factoring is a very popular method of solving cash issues at small and medium businesses all over the world. This is because, at the end of the day, invoice factoring is a far superior option when compared to bank loans.
Contact The Commercial Finance Group In Los Angeles Today
If you have been looking for an option when it comes to improving your cash flow situation as your business is concerned, we would suggest you look further into invoice factoring. If you need assistance, you can contact The Commercial Finance Group today. We would love to be able to assist you moving forward.
