Five myths about invoice factoring –busted!
Factoring in some quarters has had an undeserved bad reputation which seems to stem from why it was used in the 1980s. A time when the Banks were free with their lending and it was therefore often only used by those who the Banks were unwilling to lend to.
Despite huge changes in the industry and the rise of many types of alternative finance with non-Banksourced credit no longer considered last-resort lending, people still labour under false beliefs and myths about invoice factoring and how it can affect their business. These preconceptions are getting in the way of many businesses using factoring. Modern invoice factoring is a safe, flexible, and effective source of finance for businesses that is often more suitable than the restrictive traditional finance from a bank.
Five myths often associated with invoice factoring
#1 Invoice factoring is only for large businesses – In fact, the opposite is often true. Invoice factoring is designed to help small or “young” businesses who don’t have a strong credit rating, are time poor or whose industry doesn’t typically allow them to acquire bank finance easily.
#2 Factoring invoices means you’re struggling financially – Wrong. People often think that when a business uses factoring it’s in trouble. But any growing business depends on maintaining a stable and strong cash flow which this service gives you. Factoring actually shows a business is aware of the risks in growth and has taken steps to overcome this – it is the perfect solution to help keep your business ahead.
#3 You need to be doing a lot of sales to get started– No. invoice factoring is ideal for small-medium businesses. We specialise in helping many smaller businesses, from new starts upwards. A typical new client to Partnership might have a turnover of between £500K -£900K.
#4 You can’t get invoice factoring if your business has bad credit – Invoice factoring IS an option for businesses with bad credit history but stable customers. Factoring can help your business grow and flourish, even if you have a poor credit rating.
#5 The process takes too long and it’s complicated – The onboarding process is pretty straightforward with funds advanced typically within a week of the first meeting. Ongoing our team works closely with you keeping the administration process to a minimum with monies available within 24 hours of invoices being raised and with us undertaking the credit control to ensure invoices are being managed correctly, it saves you time to focus on your business rather than being stuck in it.
Invoice finance benefits
You will no doubt have heard about invoice finance and now you know the most common myths about invoice factoring that you once would have believed were true, you might now be wondering about the benefits for your company.
Factoring is an alternative form of financing that allows your company to access cash sooner than waiting for payment from customers. It is a facility that grows as you do; a way to not only manage your cash flow but also reduce the time pressures, admin and stress related to collecting payments yourself, as your credit control is outsourced to the provider.
Invoice factoring is for winners NOT losers…
The truth is, invoice factoring is not only easy to understand but also great for small businesses who want financial stability and cash flow at their fingertips.
Give invoice factoring a try–let us take the pain out of credit control
If you still have questions about anything related to the process or would like to know more before making any decisions, feel free to contact us for further assistance.
We are experts in invoice financing and will be happy to answer your questions.