What Are Accounts Receivable Funding Companies?
When you’re managing your own small business, it seems there is no end to the amounts of expenses it requires. You know the phrase, “you have to spend money to make money,” but man! Sometimes it feels like there isn’t an end in sight. How do you get funding to take your company to the next step? You’ve heard of lenders and investors, but what about accounts receivable funding companies? They could be your business’s best option to take itself to the next level.
How a Factoring Loan is NOT a Loan
Are you searching for a factoring loan? We can help you! But first, we want to tell you that a factoring loan is NOT a loan. At least, it’s not like other loans you’re familiar with. The money you get from factoring loans is YOUR money—it’s not money you’re borrowing and have to pay back. Factoring is a real business decision that can help your business operate and grow.
Why Small Businesses Are Thankful For Capital Funding
When you want to start a small business many of the initial decisions and plans can be fun! It can be fun to think of a business name and pick a logo. You’re passionate about it. You’re looking to solve problems for your customers. You have a mission you want to achieve—it’s all so inspiring! But starting a small business takes more than passion and inspiration. It takes resources, time, and something called “capital.”
Four Reasons To Be Thankful For Payroll Factoring
What are you thankful for this year? People often think of their family, friends, and health. If you’re a business owner, there’s even more to be thankful for. This could include good employees, good customers, and a strong foundation. But we know it takes help and resources to create a successful business. Services such as payroll factoring help your business function and manage your concerns.
What Is A Factoring Company?
There are many organizations out there claiming to help you better run your business. Get-rich-quick schemes and snake oil salesmen are everywhere. Your business is too important to risk with false claims or bad deals. But sometimes, you are in need of increasing your cash flow. You might feel like your only options are selling equipment, letting employees go, or taking out loans. Before you take any of those steps, learn more about what a factoring company can do for you.
How A Small Business Uses Factoring Loans
So, What Exactly Are Factoring Loans?
Loan factoring is also called invoice factoring. It’s sometimes referred to as selling your accounts receivables. Whatever the vocabulary, factoring involves a third-party factoring company purchasing your unpaid invoices. The factoring company typically pays you 80-90% of the accounts, then take over full responsibility for getting that payment. Once they get paid, they pay you the rest, charging a small fee.
Factoring Loans for Small Businesses
Many types of small businesses find partnering with factoring companies useful. Cash flow can often be hard to come by in small businesses. They often don’t have a lot in their liquid assets accounts and that can be for a variety of reasons. If a business is new and establishing itself, it’s having to make plenty of payments while growing its customer base. Maybe a small business just started hiring its first employees. Or, when trying to follow the mantra “you have to spend money to make money,” it needs to invest in marketing or advertising. Honestly, almost any business with accounts receivables could sell them to a factoring company. Certain types of businesses—big or small—can find it especially helpful.
Small Businesses That Love Factoring
Government Contractors: It’s a big deal when small or medium-sized businesses win government contracts. It’s a real “we made it!” moment. But all the bureaucratic red tape can take a while for your checks to come in. Government agencies can also require businesses to do much of the work before they even begin processing payments. Using a factoring company means you can get your money on your schedule, not the government’s.
Business-to-Business (B2B): Providing services to other businesses is known as business-to-business or B2B. It’s often a great model for a company, especially if you provide specialized or technical services. But, it can often lead to a stagnated cash flow. Your business might be on a 30-day billing cycle when your customer is on a 60- or 90-day cycle. Factoring loans can meet you in the middle so you’re not stuck waiting for your money.
Staffing Businesses: Staffing businesses are a great example of a business-to-business industry. Many different types of companies look to staffing businesses to help fill in seasonal employment gaps or shop for new hires. The company pays the staffing business and the staffing business pays the employees. Often, a company’s billing cycle does match up with the payroll dates. But those employees need to be paid regardless! Factoring loans can help fill in the gap so the business can keep on as usual and those staffers can get paid.
UC Funding for Small Businesses
Besides the above, manufacturing, security guards, and information technology industries also find factoring loans helpful. Your small business might fit into one of these categories, or you might have other needs. If you think factoring loans might work for you, contact United Capital Funding online. You can also call us at 877.894.8232. We can also give you a quick quote and discuss if factoring loans are right for you and your small business.
Article Posted On: October 02, 2018