Posted by admin | Posted in Alternative Financial Products for Small Business, Cash is King, Factoring Receivables, Grow Your Business, New Business, Receivables Factoring, Small Business, Success in Small Business | Posted on 16-04-2013
As an owner of a factoring business, I like to provide as much information as possible on how factoring receivables works. One question that occasionally comes up, both from potential clients and people interested in my business “What will customers think?” Put more simply, “How will factoring receivables affect my relationship with my customers?”
Some people have the mistaken idea that only businesses in financial crisis work with factoring companies. Nothing could be further from the truth. In contrast, most small businesses utilize factoring because they are growing too fast! I commonly refer to this scenario has small businesses experiencing “Growing Pains” that result in the need for factoring. More and more, as people are getting more educated on factoring receivables, they are finding factoring as an excellent alternative to help relieve the pains of growing a small business. In fact, most large companies are very accustomed to working with a factoring company on behalf of their vendors.
Most of the businesses that we work with are startups, companies experiencing growth, or seasonal service providers. As we all know ‘cash is king’. All businesses, whatever their phase, are driven to success by liquidity. Very few businesses can wait 30 to 60 days for payment of their invoices.
Factoring, along with the added cash flow it provides, can actually improve a business’s relationship with their customers. As a by-product, factoring allows business owner to focus on their core business, increasing sales, and providing excellent customer service because they aren’t chasing down payments or constrained by tightened cash flow. Improved liquidity provides for a better level of service and that is a win-win for everyone involved.