Does the situation sound familiar?
Your billable hours look great, but your clients are taking their time in paying for the goods and services you provided them? And, in the meanwhile, your business is getting affected because you are on the negatives with the operating funds and cash in hand.
If yes, then you should consider selling your outstanding invoices to an invoice funding company. If you are already considering moving to this option, here is what you should know and consider before making the decision.
Where to Begin
Ideally, if you are considering invoice funding, you should begin with research. This will give you the perfect idea if you really need to go for factoring and if yes, which invoice funding company should you choose. Don’t make a hasty decision and take your time asking your colleagues and contacts for the best options they think you have. Make sure you choose a company that has factored before and is not new in the business.
Another important thing to consider here is the factoring fee which tends to build up over time and ultimately cost you much more than lending. It is, therefore, important to do your math before you choose any factoring company. However, the higher fees may not be a problem for many of the companies out there since they are receiving an immediate working capital to keep the operations running.
Before you sign the contract, make sure you and understand the terms of payment and other conditions written in it. It is even better if you get it read by an attorney and ensure there are no hidden charges there in the contract. Only sign the contract when you are sure that you understand the things written in the contract clearly.
Types of Invoice Funding
If you are going for invoice factoring, you should know about its types and choose the one that best suits your business:
Recourse Funding: This is a cost effective, readily available and the most common type of factoring. The factoring company will pay your for all the invoices but will ask you to provide a refund or the invoices that remain unpaid by your clients after a certain period of time. You will get better rates with this type of factoring.
Nonrecourse funding: This type of factoring will free you from all kinds of liabilities related to delinquent accounts. This will cost you more since the invoice funding companies will be taking more risk and will involve more legal work.
Now that you have decided to go for invoice factoring, it is important that you know in detail about all the crucial terms and conditions associated with it. If you are looking for a reputable and highly experienced invoice funding company, you will get none better than Carter Funding. Get in touch with them to know more.