Important Facts About Factoring
Factoring is a financial tool that many businesses are using, but there are still many myths about it. If you’re not sure about how factoring will fit into your business, it makes sense to talk to a lender to get the details. Here are some facts you should consider.
Setting up an account for factoring is much quicker and easier than what it takes to get traditional lending. There’s less paperwork and you get your money much quicker, so you can solve problems.
Factoring Is Based on Your Customer’s Credit
Traditional lending is usually determined by your own credit report or your business credit report. With factoring, it’s your customer’s credit score that matters. It can open the door to funding that your business might not otherwise qualify for.
Funding Grows With Your Business
When you factor your invoices, your ability to get more money grows with the size of the invoices. You don’t take on additional debt, nor do you give up equity for greater funding options.
Boost Your Cash Flow
One of the key benefits of factoring is the ability to get paid on invoices quickly. This can really bump up your cash flow situation. Instead of waiting for customers to pay your business, you have working capital in your accounts, allowing you to address the problems at hand on your own schedule.
You Don’t Have to Factor All Your Accounts
Factoring clients may choose to fund some of their invoices and not others. You can become more familiar with factoring if you choose to only factor one account to get started. This way, you can see if it will be a good fit for your business before you go all in.
Contact Diamond Commercial Group for more information about factoring to see if it can help improve your cash flow and bottom line.