When you send a bill to your client for the products that they received from you or services that you provided, it can be at least a month before you see payment from them. In this time, you can have an emergency or need equipment that requires cash immediately. You are able to sell your invoices to a third party who will give you a portion of that money upfront and collect the rest for you. Here are a few reasons why you should work with a factoring company to fund your business.
Applying for most loans requires having your credit run as well as supplying the lending corporation with a copy of your financial records. This can cause an issue for you if you have had troubles with your cash flow or you are brand new in the industry. They may demand collateral, such as inventory, property, or equity in your company, if your rating is too low to be approved. A benefit to selling your invoices to a third party is that you can get the money that you need right away despite what your history is like. The factoring company considers the volume of the bills that you submit when they consider purchasing them over your financial situation at the time.
It can take weeks from the day you apply for your loan to the day that you get the money that you need. When you sell your invoices to a third party, they will pay you for those documents when they offer to buy them. This means you get the cash that you require shortly after your products are shipped to your customer. You will only get a percentage of the bill at first, usually 70-80% of what is owed to you. However, when your client pays it off, the factoring company will send you the balance minus the fees that they charged you.
When your clients make a large purchase with you, it can be a challenge to pay it off in one lump sum. The company that purchases your invoices can in turn bill them with terms to make those increments easier for them. The organization represents you when they communicate with your customers, including following up with bills that have yet to be satisfied. If it is necessary, the factoring business will also run the credit of those you work with if they feel that there will be an issue.
Andrés GuzmánOctober 4, 2023My experience was nothing short of outstanding. PRM exceeded my expectations in every way.
ARMY 4LIFESeptember 29, 2023They have the best customer service! They treat you like family 😊
Mari M VelazquezSeptember 27, 2023The best company to do your loans with! Highly recommend it 😊