To understand the full impact of invoice factoring to a business, one needs to know the benefits of invoice factoring that a business can derive in the short-run as well as in the long-run. Here is a list of top 5 benefits of invoice factoring that Ohio invoice factoring companies, for instance, offer to the businesses in the state of Ohio.
- Instant access to cash and stress reduction: If you have a fair idea on invoice factoring, you would know for sure that invoice factoring (also known as invoice funding) permits you to collect cash across the counter. Here, the credential of your client is important with a view to qualifying for the invoice factoring. Having said that, we mean, your client must have a good credit score in the market based on which the invoice factoring company will purchase your invoice. However, this purchase is done at an agreed rate on the face value of an invoice. In other words, invoice factoring effectively manages the stress of your business by giving an instant access to the much needed cash.
- No debt cash flow: When you go for invoice factoring, you don’t need any loan. Instead, you sell the invoice to a third party that gives you cash instantaneously in exchange for a commission that may vary anywhere between 3-5% based on your ability to negotiate with the Ohio invoice factoring companies, for instance, here. It means you will not be burdened with any interest. Instead, you will have tremendous potential and opportunities to grow with time in the business.
- Flexible terms: Unlike the business loan issuing companies and the financial institutions, there is no hard and fast rule to avail invoice factoring. Having said that, we mean, no formal contract is needed here. You can simply contact an invoice factoring company and discuss your exact requirement. Through invoice factoring companies usually start offering cash at 70% of the invoice value, you can take it to your favour up to 95%. All that you need here is a good negotiation skill and a financially sound client.
- Funding for expansion: They say money begets money. Invoice factoring can be the best example here. The normal payment schedule for the B2B (business-to-business) clients is 60-90 days. It means you have to wait for 2-3 months after you have done the work for your client investing money from your own source. It further connotes that capital thus invested remains idle for the next 2-3 months. But, an invoice factoring helps you get that capital and the profit back to your business in no time. The discount parted away with the invoice factoring company here can be treated as a normal business expense. It thus reduces the tax burden by adjusting the net taxable income.
- Overhead cost control: You will not be required either to depute your sales person or a collection team for the purpose of money realisation from the client.
In short, you can take more work with the help of invoice factoring beyond doubts.