What would it mean for your business if you could receive all of the money that your customers owe you right now?
As most business owners know, this isn’t often the case. Thanks to the 30, 60, or even 90-day payment periods associated with most customer invoices, there’s often a large discrepancy between the dollar amount you’ve earned and the dollar amount you currently have in usable cash.
This discrepancy can turn into a big problem for business owners who have employee paychecks, bills, and other business expenses to take care of on an ongoing basis. After all, what good does an outstanding 60-day customer invoice do when you have real business expenses you need to pay today?
There’s no worse feeling than pouring your heart, soul, and life savings into a new business venture, only to be met with the stressful reality of not having enough working capital to keep your business afloat.
Fortunately, there is a way to convert those outstanding customer invoices into quick cash that you can use right now.
How? With invoice factoring!
Invoice factoring is a low-risk financing option for business owners. During this process, businesses sell their outstanding customer invoices that are due and payable to a third party firm, called the “factor,” in exchange for a fee. In other words, the factor pays the business in cash today, and receives payment from the business’s customer at a future date (whenever the invoices are due).
It’s a good idea to have a solid understanding of the nitty gritty details associated with invoice factoring before you decide whether or not it’s the right cash flow management solution for your business. The infographic below contains all of the information you need to understand the ins and outs of invoice factoring, including benefits, terminology, and the step-by-step process.
Original Source: Is Invoice Factoring Right for You?
Guest post by writer Rebecca Kennedy