If you’re struggling to fund your business’s growth or need to cover unexpected expenses, your first thought is likely to apply for a business loan. While loans are an option, they’re not always ideal and could end up putting your business at risk. Instead of applying for a traditional business loan, consider using invoice factoring to help you get the money you need. Here are a few key reasons to start now.
- It Gives You Money You’re Already Due
If you receive the bulk of your payments through invoices, you don’t have access to the money until your clients pay you. When you factor invoices, you’re getting access to that money long before your clients pay up. This means you won’t have to wait or chase down late payments just so you can pay the bills.
- It’s Cheaper Than a Loan
Believe it or not, loans cost a lot of money. You have to pay the origination fee, interest and may need to cover late payments penalties until the loan is paid in full. When in factor, the fees you’ll incur are much lower. You pay a set rate to the company and don’t have to worry about overly high-interest rates.
- It’s Easy To Qualify
Loans require a proven history of profits and high personal credit scores. If you have neither, getting a loan will likely feel impossible. When you work with a company to factor invoices, you’ll find it’s easier to get the money you need. They care about the invoices you receive, not your credit. As long as your customers can pay eventually, you’ll qualify for the money.
- You Can Use It as Needed
When you take out a loan, you get the money upfront. You’re required to pay it back in full even if you’re not actively using the money. Factoring allows you more flexibility as you’re able to factor invoices as needed without locking yourself into an extensive contract. If times are good and you don’t need extra money, you don’t have to factor invoices.
- You’ll Have Help With Collections
One of the biggest headaches for business owners is having to chase down late invoices. It takes time away from your business. When you factor invoices, the company giving you the advance on those invoices helps you track down those late payments. Even better, they’ll keep you updated on where each invoice stands throughout the process.
If you’re looking for a flexible and affordable alternative to traditional business loans, factoring is your best option.