How Can Accounts Receivable Factoring Reduce Stress?

August 8, 2016

One of the toughest parts of business is waiting. You send your product to your customer or provide a service for your client and you wait to get paid. Sometimes it takes 30 days, 60 days, or even 90 days, not to mention the times the invoices are not paid according to the terms and it takes even longer than agreed upon.

You still have to pay your bills. You have to purchase inventory. You have to pay employees. You have to run sales and marketing campaigns. You need steady cash flow and cash in hand to keep your business operating smoothly. The problem is, you have already sunk your cash into producing the last batch of products or providing the last month of services. Now you are stressed out, waiting, and hoping that everyone pays the invoices on time.

A Simple Way to Remove Business Stress

Here is a simple way to remove this stress, and it does not require going to a bank and applying for a loan. The solution is accounts receivable factoring. Factoring puts money in your pocket now and saves you from having to wait months for your invoice payments. It allows you to put your cash to work instead of keeping your business in a holding pattern. Most important, accounts receivable factoring keeps your business active, advancing, and growing.

In simple terms, here is how it works. A factoring company purchases your invoices for a discount, normally 97% to 99% of face value. You receive the cash quickly to operate your business, and they take on the responsibility and headache of collecting payment on the invoices. Now that is much easier, faster and less stressful than applying for a bank loan or waiting for the invoices to be paid. Most of the time, the factoring financier only needs to see your invoices and to make sure that your customers and clients have a history of paying the invoices.

For example, let's say you had $50,000 in accounts receivable invoices. The factoring company could pay you $49,000+ for those invoices. You could receive the majority of that payment in as little as 24 hours. Then, you can invest those dollars back into your business. That means no waiting 30, 60 or 90 days to build your business.

Yes, there is a small trade off. You do lose a small percentage of the dollar value of your accounts receivable invoices, but here's what you gain:

  • Guaranteed Steady Cash Flow to Operate Your Business
  • Freedom from the Time and Headache of Collecting Outstanding Accounts Receivable Invoices
  • More Time to Grow Your Businesses by Marketing and Sales
  • Satisfied Employees Who Have Job Security and Get Paid On Time
  • A Decreased Debt Load Since You Do Not Have to Borrow Money from the Bank

The best part is: A reduced stress load. This peace of mind enables you to invest your time, money and energy into growing your business, rather than worrying about how to secure the cash you need but don't have.

In the meantime, give us a call at 877-648-3709 to learn more about how you can factor your accounts receivable or check out all the resources on our site. We have created video blogs to explain the different types of factoring, sections dedicated to the transportation industry, staffing companies, and more. Take some time and navigate around, and if you are ready to utilize accounts receivable factoring, contact us.


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