Setting up a business is no small feat. It requires dedication, commitment, and strong business skills – especially in managing one’s finances to keep the organization profitable. After all, nobody would want to go into a particular business if he or she is simply going to break even. While your capital investment helps you start up your business, it is basically your operating expenditures that you have to look after. Cash flow problems often spell disaster even to well-meaning businesses but most especially to small and medium scale enterprises. Instead of drawing a loan from a bank or a financing institution which typically takes a very long processing period with a considerably lower chance of getting approved, it is better to get invoice funding or invoice factoring to help you with your cash flow problems.
Invoice Funding: What It Is and How It Works
Compared to securing a bank loan or some other form of financial assistance for small business cash flow issues, invoice funding is a preferred method of securing hard cold cash for a variety of needs without the lengthy and tedious process of loan application and its concomitant prohibitive interest rates.
Invoice funding works by giving you access to cash for all of your invoices that have yet to be paid by your clients or customers. An invoice funding company, like Carter Funding, essentially advances the cash value of those unpaid invoices. The company deposits this cash into your organization’s bank account. You can then use the deposited amount to pay the salaries of your employees, purchase necessary equipment that will further help advance your business’ productivity, make important repairs or maintenance of your existing equipment, or any other purpose that is related to your business activities. You will then repay the cash advance that was deposited to your business’ bank account, together with a small fee, over a predetermined time period.
Invoice Funding for Cash Flow Problems
Generally, there is one type of invoice funding for cash flow problems. Invoice factoring. Factoring for cash flow typically involves advancing only a certain percentage of your unpaid invoices. This can greatly vary between providers. Carter Funding will give you up to 90% of the cash value of your unpaid invoices. For instance, if you have a total of $20,000 unpaid invoices, you could receive $18,000 in advance. You don’t even have to worry about collecting the payments from your clients and customers as the invoice factoring company can do it for you.
Benefits of Invoice Funding
Regardless of the type of invoice funding that you choose to address your cash flow problems, know that these can provide you with exceptional benefits such as the following.
- Fast cash – This is perhaps one of the most important benefit of getting invoice funding to solve your small business cash flow issues. In a typical bank-approved business loan, you will still need to way for a significant amount of time before your requested funds are released. For small businesses, time is ticking. Every day that you are waiting for your funds, you are also spending which can defeat the whole purpose of asking for financial assistance. Invoice funding companies give you fast cash.
At Carter Funding, if you agree to their funding proposition, you can receive your funds on the same day. This simply means you can use the cash to fund your other business activities the following day, if not on the same day. There really is no point in requesting for emergency business fund if you have to wait several weeks to get your cash.
- Easy application – Applying for invoice funding doesn’t require you to go to the bank and submit all your documents for screening, evaluation, and processing. Many invoice funding companies provide you the ease of application using your computer or even mobile device. Carter Funding, for instance, guarantees 24-hour approval and you can easily get your funding not longer than 3 days. Best of all, it is absolutely free.
Businesses with limited credit history will also find the application process with invoice funding companies to be a lot simpler. Banks require credit-worthiness which can only be established over time. If you are a new business entity, proving to banks about your credit-worthiness might be a challenge. On the other hand, companies that provide factoring for cash flow will typically look at your customers’ or clients’ financial soundness.
- Affordable and flexible – With factoring rates as low as 1%, getting an invoice funding is definitely more affordable than securing a bank loan or any other type of loan from a financing institution. You can also get up to 90% of your invoice cash value. More importantly, since you will be repaying the advance within a predetermined period of time, typically over 12 weeks or even 24 weeks. What’s more, if you already have the funds, you can easily pay what you owe in advance.
- Worry-free collection – Invoice factoring companies handle collections so you don’t need to worry about credit checking, billing, and even additional manpower or staffing specific for such functions. At any rate, you can channel your resources to other more meaningful activities like improving the overall workflow of your business.
Invoice funding can help with cash flow problems by giving you access to cold hard cash in as short as 24 hours. The application process is easy and you don’t even have to worry about sky-high interest rates. You can then focus on really growing your business.