How Small Businesses Can Use Invoice Factoring To Deal with the New Year
Around this time the previous year, many businesses have to stop spending. But right now, indications suggest that the recession is almost gone and small businesses can get on with their normal “lives.” Therefore, now is a good time to consider what the recession has done to your business.
But go beyond your business – think about the recession’s effect on your industry as a whole. Has your customer base altered? Or is it that your rivals have lowered their prices? What about their service offerings? Are you keeping up? Recessions cause changes, and it is imperative to examine all aspects of your business.
If you have gone through hell and back – retrenching people, reducing salaries – just to survive, then you might want to keep in mind these things considering that the business outlook is getting brighter.
First, a lot of companies are going to begin hiring again, which means you could get some new staffers after another company goes out of business. But your employees also might get a better offer elsewhere. So make sure they are satisfied, or you could lose them. Most people are are going for jobs that allows them to make more money to pay off their bills after the last year.
Also, be careful about what you spend money on. Now that business is getting better. Set your priorities: choose new computers over re-decorating. Think about long term against short-term debts.
Most businesses have learned how to use invoice factoring to stay afloat during the recession. This business tactic would be well suited after the New Year. Indeed, it’s a good alternative in keeping your cash flow healthy, while still being able to address your debts.
And there is a better piece of news than just factoring – there’s what we call “spot factoring.” It’s when one invoice at a time is factored. It is not a loan – instead, it’s the purchase of financial assets, or receivables from a factoring company. Traditional bank loans involve two parties, while invoice factoring involves three parties. Banks center their decisions on a company’s credit worthiness, while factoring is based on the face value of the receivables. With invoice factoring, there are no minimums, no maximums, and certainly no long-term commitments.
By using a single invoice factoring, your business – regardless of how small – can get back on its feet. How? Several businesses don’t get paid right away for delivered products/services. This has a negative effect on the cash flow and may even deter the business from producing new orders on time. Invoice factoring benefits businesses that don’t get paid for 30, 60 or 90 days by advancing up to 90% of the invoice total, at the time of order fulfillment. IFG checks the creditworthiness of the client’s customers and can provide funding within as little as 24 hours.
