• Sun. Jul 14th, 2024

Beyond Factoring, Five Benefits of Factoring Companies

Factoring bills has incalculable benefits. Most businesses that have B2B invoices are qualified, and you’ll get an instant boost of operational cash that you may use whatever you choose. However, there are a ton of other benefits to working with a factoring company that are unrelated to them. We’ll go over some of the things factoring companies can do for you that you probably didn’t know about in the time it takes you to read this, such the advantages and disadvantages of non-recourse factoring in compared to conventional bank loans.

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1. Credit Reports to Reduce Unsightly Debt

Being qualified for invoice factoring, including non-recourse factoring, is made easy in large part because your business isn’t scrutinized in the same way as when you apply for a bank loan. The reason for this is that the factoring firm is now paying more attention to your client, who bears the responsibility of paying the invoice. Credit checks are performed to ensure that money is only being advanced on invoices that are most likely to be paid in whole and on time. This will help you manage your cash flow and reduce the likelihood of bad debt.

Up to 10% of invoices are written off by small businesses as bad debt, according to CPA Practice Advisor. This suggests that with a single solution, you might greatly increase your profitability and cash flow.

2. Time- and money-saving services for collections

The majority of financing alternatives require your business to repay the money it borrows plus additional fees and interest. The difference with factoring is that you sell your factor the bills, and they handle the responsibility of pursuing the unpaid sum.

It’s quite customer-friendly how this is handled; it nearly feels like your billing is being done by someone else. Your clients are happy because they are getting great service and your business isn’t saddled with overdue bills.

Nearly two-thirds of small businesses, according to Intuit, spend an average of 14 hours a week on administrative tasks related to collecting invoices. Working with a factoring company allows you to reallocate those 728 hours annually to concentrate on strategy and important duties inside your company.

3. Receivables Management and Reporting for Better Supervision

It might be difficult for small businesses to keep an eye on things like invoice age and payments. Late payments add another layer of difficulty, especially when trying to manage and anticipate cash flow.

Because factoring allows you to obtain your money instantly, forecasting and budgeting are made simple. Your factoring company also manages reports, so you always know who has paid and whose invoices are outstanding. This digital service is powered by Viva. You may access your account at any time of day with your personal Customer Account Portal.

4. Benefits Specific to Your Industry to Help Your Business Grow

Businesses that factor may have specialty unique to their sector. This typically means that they have a deeper grasp of your industry than others and may provide tailored solutions to help you run a stronger, more prosperous business.

For instance, the multi-industry business Viva specializes on transportation. Discount cards and gasoline advances are also available to our freight factoring clients.

5. Various Funding Options to Strengthen Your Business

There is no one-size-fits-all approach to corporate financing. Factoring is the same in this sense. Occasionally, a company discovers that it isn’t the best solution, or as the company grows, its needs change. A seasoned factoring company recognizes this and offers extra funding choices to help ensure that the needs of its clients are met. Here are a few examples of the various funding alternatives that Viva offers.

Factoring in reverse

The factoring business pays the supplier’s invoice upon receiving a request for reverse factoring from a company with good credit. This gives the business more time to pay the supplier and ensures that, even with the supplier’s bad credit, payments will be made on schedule.

Using Assets to Determine Lending

Under an asset-based lending agreement, a loan is secured by your assets. It is advantageous to work with a factoring company that is familiar with your industry, like Viva, since we are able to offer financing against non-traditional assets and typically have a greater sense of the value of what you’re bringing to the table.

Low-Cost Credit

The best course of action is usually short-term finance when a company needs an injection of operational capital faster than a typical loan can be returned. The loan amounts are occasionally adequate to pay equipment expenses, seasonal demands, or taking on additional jobs, even though they are frequently less than conventional loans. Consequently, the repayment schedule is shortened.

Equipment Financing

A business can utilize equipment finance to buy, rent, maintain, and fix its equipment. Traditional lenders don’t usually give it since they often find it difficult to assess the equipment worth for certain enterprises. However, factoring companies are better able to help, especially those with industry-specific expertise.

Debt Repayment via Venture

While most venture capital options include giving up board seats, certain factoring companies, like Viva, offer venture loan investment without asking the lender to give up ownership.

Simple Pay Schedules

Quick pay options enable you to ensure that your employees receive their salaries on time by disbursing the capital contained in your bills. As an example, Viva offers a Construction Quick Pay Program that lets general contractors ensure that subcontractors are paid on time even if the project hasn’t been paid for in full. The general contractor has complete choice over which subcontractors are paid on time and for which projects. Whether to approve a subcontractor’s request for a rapid pay payment advance is ultimately up to the general contractor.

Programs for prompt payment enhance relationships and trust with suppliers. They also ensure that projects are completed on time and that supplies are reasonably priced for all parties, sparing the general contractor from having to pay for them out of pocket.