The idea of invoice factoring can be mysterious and confusing to many business owners. Although businesses across various industries have been factoring their accounts receivables for a pretty long time, the method isn’t always completely understood by some business owners. Here are just a few of the most common misconceptions and myths that some business owners believe to be true about invoice factoring.

Myth: The only businesses that use invoice factoring are failing or are close to going out of business.
A factoring company’s job isn’t to fix a failing business. Instead, they would rather work with businesses that have reliable, creditworthy customers that will pay their outstanding invoices. Accounts receivable factoring is a great tool that many businesses utilize to generate positive cash flow.

Myth: Only very large companies are eligible for invoice factoring.

Factoring companies work with businesses of all sizes and from all industries. If you’re looking to start factoring your invoices, find a factoring company that has some experience working with businesses like yours.

Myth: When you work with an invoice factoring company, you don’t have control over which invoices will be factored and which you’ll collect without the help of factoring.
Every factoring company is different and has its own requirements and terms, but many are flexible and let their clients choose which invoices they wish to factor.

Myth: Most businesses can’t afford to factor their invoices, it’s too expensive.
While it’s true that invoice factoring is not free, the fees and terms are reasonable. In exchange, your business is able to benefit from the cash advance they provide you. The cost of invoice factoring can actually be a lot more affordable than what interest on a bank loan ends up being.

Myth: Invoice factoring companies will harass your clients.
Reputable factoring companies are professional and will act respectfully towards you and your clients. They are helpful to your customers and will provide them with great customer service, just as any professional business would.

If you’re still looking for more information on invoice factoring, contact us to see how we can help your business.