![]() ![]() Compared to other small business loans, invoice factoring often costs more and is accompanied by additional fees. Factoring rates and fees tend to be higher than those of traditional business loans: Fast cash comes at a cost.Having the ability to tap into much-needed cash flow empowers you to focus on your real objectives: growing your business. Spend your time growing your business (rather than chasing down clients): When you first set on your quest to become your own boss and make your entrepreneurial dreams a reality, you sure didn’t think you would spend a good part of your day sending emails like “Re:Re:Re:Re:Re:February Invoice” and following up on partial payments from clients.So, if your credit, or time in business, is preventing you from securing other small business loans, invoice factoring may be the right option to secure working capital. Easier approval: Many banks are hesitant to lend to small businesses in general, much less those with less-than-excellent credit.With invoice factoring, your credit score tends to not even be a factor - lenders are primarily concerned with the creditworthiness of your customers (since your customers are technically responsible for paying back what you borrowed) and outstanding invoices.Being able to meet the necessary financial obligations to get to work right away is a major plus for invoice factoring, with funding in as little as one to three business days. Fast access to cash: Turning down a big order from a customer and letting the competition snag that business is never ideal.Let’s review some important pros and cons when it comes to invoice factoring. With those funds, she can avoid a cash crunch and keep a steady flow of capital to cover staging items and moving fees. However, every time a new client requests a staging, Tiffany needs to procure additional materials - and that requires a significant amount of upfront cash that she won’t see in her bank account for another 30 days.īy factoring receivables, Tiffany uses an invoice from a previous job and gets an advance rate of 70 to 90 percent of the total invoice within 24 hours. While Tiffany charges an initial consulting fee, she generally gets paid on a monthly basis. ![]() When Tiffany receives a staging assignment, she buys or rents furniture, artwork, and other decorations to give the property a specific look and feel which makes it more attractive to potential buyers. Let’s imagine that Tiffany runs a residential staging company in which she’s hired by real estate agents to furnish and prep homes that are for sale.
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