Factoring has been a financing tool that many businesses have used to generate cash flow, although there are some businesses that dismiss it because they don’t know how it works and what benefits it can give you. Factoring is a service that provides a business cash-flow acceleration through the purchase of invoices. It’s actually quite simple. The factoring company buys a business’ invoices so that they no longer have to wait anywhere from 30 to 90 days for payment from the original customers. Here are some reasons why you should be factoring your business’s invoices:

1. It’s a simple service. There aren’t huge applications or extensive credit checks. It’s quick and easy to apply for factoring.

2. The funding process is quick. Funding can happen in just a few days after approval, sometimes even in less than 48 hours, where traditional lending can take up to a month to obtain.

3. It’s an industry friendly service. Factoring is a financing option for businesses of any size in many different industries. If your business bills customers via invoice, you’re most likely eligible for funding. A few industries we serve are trucking, staffing, oil and gas, and distribution.

4. There aren’t any audits. Quite a few banks require audits, even for small loans. These audits can become pretty expensive.

5. Factoring companies don’t require a long-term financial history. Unlike traditional lenders, factoring companies don’t require to see years of your tax returns and other financial information.

6. Your personal credit is not a factor in getting approval. You don’t need to have perfect credit, although traditional lenders will require this. Your customers’ credit, however, is important. Since they’re the ones who will technically be paying the factoring company once they own their invoice, it’s important that the factor knows they’ll be paid.

7. There isn’t any collateral required. Factoring companies don’t require any second trust deeds on homes or other properties, like offices or warehouses. Most banks require physical collateral, though.

If you’re still not sure if invoice factoring is right for your business, contact us today to see what we can do for you!

Post written by Senior Copywriter “Nikki Wakefield” of CoreFund Capital, LLC.