Understanding The Dynamics Of Debt Factoring

August 14, 2020

Debt factoring can get you the cash you need immediately without the hassles of waiting for a client to pay your invoice. Simply put, debt factoring is the act of selling your unpaid invoices at a percentage of what is worth. You can grow from debt factoring in many different ways and below we discuss the fundamentals of how it can benefit your business.

Are you running a small to medium sized business and are looking to create a rapid cash flow? Please get in touch with BP Financing today and immediately start collecting the capital you’re owed today!

Create a source of instant capital.

When you sell your unpaid invoices, third party companies are essentially buying the rights to your client's debt. This puts money in your pocket instantly so you can pay your bills on time or allocated capital into areas that require funding on an immediate basis.

Reduces profits.

Oftentimes, you will have to sell your unpaid invoices at a slight loss to make its purchase more appealing to a buyer. This disadvantage proves worthwhile when you are able to speed up access to funds that you need immediately. Selling your invoices for a few hundred dollars less than what they’re worth won’t seem like big loss when your dealing with larger sums of money.

Accelerates growth.

While you may lose money on the invoice, debt factoring gives you speedy access to instant capital that you will need to use to grow at a consistent pace. New businesses need to have easy access to the necessary funds in order to make the most of crucial opportunities that will arise on the way to a business's maturity. Money will constantly need to be moved around quickly and allocated towards the right areas.

Saves time.

Having access to the funds you need on an immediate basis can also make up for the loss of profit in other important ways. The large amount of time businesses will have to allocate towards handling issues with the debtor like chasing them down for the money, a refusal to pay, or contesting the price listed on the invoice. In some cases, debtors will give you pushback on the invoice and end up costing you valuable time that should be used to focus on the immediate growth of your business. This will ultimately lead to a series of complications and headaches that emerging businesses should not have to worry about.

BP Financing specializes in accounts receivable finance guaranteed to help our clients receive their money within 24 hours instead of having to wait for weeks to get paid. The majority of our factoring experience comes from the trucking industry where we spent the last 15 years helping professionals receive the money owed to them instantly. When you work with us, you can expect speedy payments, no new debts, zero interest, and first-class service. If you’re running a small to medium sized business and are in need of financial services that exist to help you grow, get in contact with us today for a free consultation and start earning the money owed to you.