What to consider before using factoring for your business

March 15, 2022

In business, when you need capital but lack access to it, you’re as good as dead in the water. Unfortunately, bank loans can take months to be approved, and other forms of lending can verge on predatory. Fortunately, factoring for your business is an excellent solution. Luckily, at BP Financing, we have 15 years of factoring experience and can service all industries. In most cases, we can get you the cash you need in as little as 24 hours. However, it’s critical to know if it’s the right option for you.

Here’s what to consider before using invoice factoring services:

Cash flow

When considering factoring services for your business, one benefit is cash flow, especially the immediate source of cash flow.

When applying for a bank loan, approval can take months, and receiving the money can take even longer. However, invoice factoring provides fast access to cash. For short-term or emergency financing needs, invoice factoring is an excellent solution.

Plus, factoring offers an ongoing cash flow solution. For businesses just starting, cash reserves are often low. Still, they have significant working capital needs. If you have low capital reserves, factoring is an excellent way to bridge gaps between payments.

If cash flow is a concern and you are interested in factoring for your business, at BP Financing, we have the cash flow solutions for you.

Getting approved

When deciding if factoring for your business is the right solution, getting approved is a significant variable.

If your company will find it difficult to get approved for loans, factoring may be a prime option. Unlike banks, things like collateral, credit score, and loan history aren’t significant variables in determining if you qualify for invoice factoring.

Instead, factoring service companies are concerned with the payment history and financial reliability of your customers, which is a huge benefit for businesses with poor credit scores or financial histories.

Moreover, factoring requires far less paperwork than lending entities like banks and can be far less demanding than other outside agents and investors who may require a piece of your business in exchange for a loan. Plus, avoiding loans can even help your credit in the long run.

If loan approval and simplifying the process is a priority, factoring is an excellent solution. Luckily, at BP Financing, we can get you the cash you need in a streamlined, hassle-free fashion.

Growing your business

Another situation that might make factoring ideal for your business is if you’re expanding. Ultimately, a major constraint on expanding businesses is the availability of capital.

Many companies experience a mismatch between cash inflows and outflows. However, if there is an opportunity your company can capitalize on, you need cash to take advantage. Business opportunities require immediate action, and waiting for a bank loan is not feasible.

By the time money is available, you have lost the opportunity. For immediate capital to meet these demands, factoring is an excellent solution to ensure you are always prepared to take full advantage of every opportunity.

Plus, growing your business can require working capital expenses, like improving equipment, purchasing materials or supplies, and even recruiting new employees quickly. Factoring gives you total control over your company’s growth and an invaluable edge in a competitive landscape.

Get in touch to get started!

Factoring for your business can be a lifesaver. Still, understanding if it’s the right solution for you and your circumstances is critical. If factoring is a viable solution for your cash flow problems, BP Financing is the premier factoring service company. We provide rapid cash for your invoices, and our passion is providing companies with a vital lifeline. Get in touch get started!

Two business men discussing financing options.