If you are a small or medium business with seasonal or occasional cash flow needs, it is time that you think about invoice financing. While you can consider traditional bank loan or other alternative financings, it is difficult to obtain such.
In recent times, invoice financing is gaining popularity as a viable financing alternative. To help you make an informed decision, here’s what your company can benefit from Qupital SME Finance:
It is quick and convenient
As mentioned, banks and other alternative financing are difficult to obtain because it requires tons of requirements or paperwork. It is not a secret that the approval process is lengthy – it can take several weeks for banks to make a decision.
The worse thing is finding out that the loan may not go through. In invoice financing, you will not go all through that trouble. The funds will be released almost immediately thereby providing you with a quick infusion of cash. In fact, if you choose the right lender, it will only take 24 hours to get the capital you require.
It can improve cash flow
Invoice financing can provide a predictable source of cash. With this, it can create greater liquidity thereby allowing your business to cover its expenses in a timely manner. With invoice financing, it uses additional opportunities to facilitate business growth.
It does not create any debts
You should consider invoice financing because it does not create any debts. This is the case since you are pulling the collection of your future invoices. By pulling the collection of your future invoices, it results in an increased cash balance.
With this, it can also reduce accounts receivable balance. At the end of the day, you will not have the burden of repaying your loans. Essentially, invoice financing supports business growth and profit.
It has no caps or limitations
When you consider traditional bank loans, they will put a maximum amount you can borrow. As soon as you reach the limit, you have to re-apply if you need additional funds.
In invoice financing, the amount of cash you put through is related to your sales volume. This means that the more sales you close, the more invoices you can factor. As your sales volume grows, you will get access to more cash through receivables.
It involves less risk
Bank loans require you to put your business and personal assets as collateral. In invoice financing, there are no guarantees so you do not have to risk your personal assets just to finance your business.
It is cost effective
Invoice factoring can reduce your administrative costs. The costs include determining credit limits, investigating the credit health of customers and collecting receivables. These tasks are done for you thereby saving you money over time.
Fluctuations in market conditions like supply costs and income can lead to inconsistent cash flow. It is nice to brace yourself with such conditions to ensure that your business will not slow down. Whatever industry you are in, invoice factoring should be the key part of your ongoing cash flow strategy.