Securing the right financing is a constant hurdle for business owners in the US and Canada. Traditional bank loans, often the first thought, frequently fall through due to stringent requirements. Banks typically demand comprehensive business plans and extensive financial projections, and established businesses usually need three years of profitability to even be considered.
However, if your business is already operational, another avenue exists: invoice factoring.
Invoice factoring isn’t universally applicable. It’s designed for businesses selling to commercial or government clients. But for those who qualify, it can be a game-changer.
Many business owners struggle with the common 45- to 60-day payment terms. Rent, supplier costs, and salaries remain due while waiting for client payments. Factoring eliminates this wait, providing payment in as little as two days. This boosts liquidity, enabling timely payments and, crucially, facilitates business growth.
The process is straightforward: a factoring company purchases your invoices, providing immediate cash. The factoring company then waits for your customer to pay. Unlike traditional loans, invoice factoring is relatively easy to secure. The primary requirement is having reputable clients.
Factoring is a strong fit for software companies, manufacturers, distributors, staffing agencies, trucking companies, and numerous other sectors. If your business requires financing and you serve reliable clients, explore invoice factoring as a viable financial solution.