5 Hidden Benefits of Receivables Factoring

Business owners often find themselves in a position where they need additional cash for their business. Many are turning to accounts receivable factoring as an easier alternative to bank loans. Some of the hidden advantages of factoring include:

1. Staying Debt-Free

Many business owners who need cash are reluctant to go into debt to expand their business or to take on bigger contracts. Receivables factoring allows business owners to leverage their invoices without going into debt.

2. Keeping Company Equity Intact

One challenge companies often face when seeking new investors for much-needed cash is the demand for equity in their company. Companies who are not willing to give up equity in their company can use factoring to their advantage and get the cash they need without losing vital control over their business.

3. Controlling What Gets Factored

Rather than being forced to put a lien on all of your accounts receivables, when you factor invoices, you alone make the decision regarding which invoices get leveraged. You can stay in control if you are working with the right company.

4. Improved Credit Rating

Businesses who are just starting out or those who have been in business a while often face seasonal swings that can ding their credit rating. Fortunately, when you are taking advantage of receivables factoring, the improved cash flow means you are paying your bills on time improving your credit standing both with vendors and with credit bureaus.

5. Nearly Instant Cash Flow

Regardless of the size a business is, there is always a possibility that cash flow will be irregular. Whether a company needs to meet payroll, buy a new piece of equipment or replenish inventory, chances are cash is needed. Leveraging invoices provides nearly instant cash flow since most factors pay out in just a couple of business days.