The service industry has exploded over the past few years. Conservative estimates place the combined revenue of the entire service industry at close to one trillion dollars annually, though most realists would place figures over that amount. However, despite high sales and revenues, service companies have a difficult time securing loans and other types of financing needed for general growth or to expand into new markets.
Service Companies and Loans
Service companies provide intangible products and services. Trucking, Software as a Service (SaaS), janitorial companies, legal firms, and more fall under the umbrella of the service industry. These businesses provide intangible goods and services, and are not direct manufacturers. Since many of these companies do not provide physical goods and use leased equipment, they are able to lower overhead expenses while increasing sales. Unfortunately, the lack of fixed assets means there is little collateral to put up against a traditional loan. This leaves service companies in an awkward position when they need financing to get a stronger foothold in today’s marketplace.
Invoice factoring is a form of financing structured around receivables, instead of equipment, property, and debt. Invoice factoring is debt-free financing whereby open invoices are converted to funds within 24 hours. Service companies issue invoices that typically have a window of up to 90 days before customers need to make payments. Waiting three months for revenue while still trying to meet payroll and overhead expenses can place a strain on cash flow. Staggered payments schedules also mean that growth strategies are put on hold. Factoring accelerates the service industry by providing fast turnaround on open invoices as they are generated. Factoring allows business owners to quickly build up capital reserves to engage new markets, hire staff, get new and better equipment, launch marketing campaigns, and anything else needed to carve out a larger market share in an increasingly service-based economic landscape. Factoring is fast, easy, debt-free, and does not involve the red tape and arbitrary decisions associated with traditional lending institutions.
New Century Financial works with service companies of all types to provide improved cash flow and supplementary funds for growth. As the service industry becomes more integrated with other businesses and the lives of private citizens, the need for a reliable source of funding is crucial for long-term growth and success. Contact New Century Financial today and learn more about our factoring services.