Are you a small business owner that has outstanding invoices for as long as 30,60,90 days and no cash to pay expenses? The probability of having outstanding invoices when running a manufacturing business vs. a restaurant. If you have accounts receivables that customers are not paying on time, you can simply sell the invoices for fast funding.
This type of loan is called invoice funding or factoring. It is asset lending and for all outstanding invoices that are over the next 1 to 3 months. There are multiple advantages of getting your accounts receivables sooner vs. later. Most of them are in this article.
Advantages of invoice financing or factoring:
- Quick and easy access to cash.
- You can plan your cash flow accurately for future opportunities.
- Grow your business with an unlimited line of credit.
You can choose a bank to finance your invoices or find a marketplace lender like BitX Funding. They will find a lender that will advance your outstanding invoices 75% to 90% upfront, and if you have government contracts or large construction jobs, no problem.
Basic understanding of Invoice Financing
Basically, lenders that provide funds against your outstanding invoices will charge a small amount of the advance as a fee or interest. For example, if you have $10,000 worth of outstanding invoices, the lender will charge 3% of the invoice value and give you the remaining 97% in cash. They give you 75% to 90% upfront; the remaining will be after your customers pay the invoice.
Factoring will help a certain type of business that are mentioned below:
- Businesses that rely on payment via check
- Businesses with lots of invoices pending
- Bad credit history, businesses cannot apply for a loan.
If you want to open a new business and have certain outstanding invoices due from your last business, you can use them to help your startup.
Lenders will check if you’re worthy
There are a couple of things that a lender also checks before they approve the advance. The items listed below will help the lender decide if you are suitable for invoice financing or not. The things lenders check are:
- Your credit history
- The credit history of your customers
- What kind of invoices your business uses?
- What is your strategy for credit control, or how do you make sure to pay invoices?
- Your business plans
- Your industry
This article is what you want to know about the basics of invoice funding for outstanding Invoices of your businesses. If you want to learn more about Factoring and how it can help your business, reach out to BitX Funding and one of their account representative.
BitX Funding is an online marketplace for small business owners looking to fund a project. We specialize in connecting small business owners with lenders who will compete for your business. We believe small business owners drive the economy and are passionate about helping your company reach its full potential.
You can reach a loan specialist toll-free at 1-800-824-2407 or email [email protected] or apply online here, and we can guide you on which loans are the best fit for your business.