Most small business owners have been in situations where they experienced cash flow struggles. While this is a common problem, more than a few solutions can help during lean times. One of these is invoice factoring, which is a type of accounts receivable financing.

With factoring, you receive a cash advance on invoices due within 90 days. However, before trying factoring for your business, you should consider if it is a good fit. Keep reading to learn some of the potential benefits offered by factoring for your business.

Streamline Your Cash Flow

When your business sells your invoices to a factoring company, you receive cash right away. You don’t have to wait for clients to pay, which gives you the ability to expand your business, fill orders, and purchase raw materials.

Statistics have shown that cash flow issues are responsible for almost 82% of all small business failures in the country. That makes this an important benefit. You should also note that with factoring, you get financing and no debt. It isn’t a loan and won’t increase liabilities recorded on your balance sheet.

Improved Credit Control

Another advantage of factoring is that it eliminates the hassle of credit control. This will help you and your team save money and time. With factoring, you can feel confident when you accept terms with your clients because you won’t have to wait for the payments to come in.

The factoring company you use will handle all aspects of credit control for the invoices included. This includes checking clients’ credit, collecting past due amounts, and providing you with reports of each transaction. Remember, trying to handle this yourself can cost a lot. However, with factoring, these services are included in the fees.

Fund Company Growth

For most business owners, you have a vision of where you want your company to be the following year and probably in five years. It is important to grow the company, and having the required working capital is essential to make this happen. Factoring will provide the capital needed to expand your business’s marketing, find new clients, and fill bigger orders easily.

When it comes to factoring, there are more than a few factors to consider. Taking the time to find a quality factoring service will pay off and help ensure you get the desired results. In the end, factoring provides an array of potential benefits for your business, which are seen above.