Factoring
One of the more frustrating aspects of working with invoices is tracking down unpaid invoices and leaning on the client to make payment. While the customer is legally required to pay, that does not always mean they pay on time, or that it is easy to secure payment from them. In difficult cases, a late paid invoice could mean a lack of cashflow or interruption of your ability to pay your business costs, including payroll. That is why it is imperative to find a solution to make sure your invoices either get paid on time or can reliably be turned into usable cash.
That is where factoring comes in. Factoring, also known as invoice factoring or accounts receivable factoring, is a type of short-term finance solution that turns unpaid invoices into cash on hand. Essentially, you as the business owner sell off your unpaid invoices for a percentage of the total to a third-party company. In exchange for taking a lesser cut, the third-party is now the owner of the invoices and responsible for tracking down payment. That leaves you with more time to focus on your business and less time worrying about difficult clients.
One benefit of factoring is the irrelevancy of your credit score. With other kinds of short-term funding, whether you are thinking about taking out a short-term bridge loan or a business line of credit, your credit comes under scrutiny before securing the funds. That is not the case with factoring, as the company purchasing your invoices is more interested in your clients’ creditworthiness than yours.
If you agree that time is money, then it can certainly be worth it to take an 85-90% payment on your outstanding invoices in exchange for saving the time it would take to deal with a trouble-client and the weeks it might take for payment to come in. Most factoring companies can provide payment within forty-eight hours.
Regardless of your need, Riverday Capital is here to make sure you secure the funds needed to keep your business thriving. Contact our New York or Florida offices or apply online today.
