Waiting is the hardest part of any business transaction. That’s why many businesses turn to invoice financing to get their money faster.
However, invoice financing is a bit of a blanket term. It merely means that a third-party company lends you money you’re owed on an invoice. Invoice factoring is when you go ahead and sell them your invoices for instant money. Lines of credit can be used, too. No matter what solution your business chooses, invoice financing keeps you flexible and prevents you from overdrawing your accounts.
Here are three reasons you might want to look further into invoice financing today.
- It has customer benefits.
The truth is, you need payment in the next week or so. But you’re worried about jeopardizing your account with a client by demanding fast payment. Or, you have a contract that allows them much more time to pay the balance owed. You can’t exactly pressure them to cough it up sooner, can you?
When you have invoice financing, you can maintain these relationships much more easily. Go ahead and give that client 30 days or more to pay. They’ll appreciate the breathing room, and you can rest assured that you’ll get the money as quickly as you need it.
- It makes managing your balance easier.
What you’re owed and what you have on hand are two entirely different stories. This can be tricky to manage if you don’t have a dedicated accounting team. If you have any clients or customers that take their time paying up, this too can make discerning what you actually have to spend more time-consuming.
You have invoices to pay, too. You have to deal with overhead on a regular basis. This type of business financing makes it so there’s a smaller gap between what you’re due and what you have, so you can go ahead and stay up to speed on your business’s bills.
If you find that you’re always cash-poor, this could be a massive benefit for you. A lot of traditional loans carry higher interest rates, and it can take a long time for approval. Invoice financing is fast money, and many companies offer low interest.
- It frees you up.
Do you have clients that need constant payment reminders? Are any customers perpetually indebted to you? If you choose invoice factoring, chasing them down is one more chore you don’t have to worry about.
Not only will you have already gotten your money, but the factoring agency will take the lead in contacting the customer for payment. Furthermore, some financing companies provide insurance, just in case the person who owes you doesn’t come through, or makes a payment that doesn’t clear.
Having a head for business doesn’t mean that you’ve mastered the money side of things. You can simplify and streamline the way you receive payments by using invoice financing. It eliminates long waits, taking pressure off of both parties. In the end, it can even mean that you no longer have to handle the awkward task of chasing down payments.