Maybe your business bank account balance is not stable. Maintaining a steady cash flow is not an easy task, especially for mid-size and small businesses. Slow paying clients, seasonal fluctuations, unplanned costs, on-time payrolls, and several elements will affect your cash flow. Receivable factoring is the best solution you require to have a steady and stable cash flow. Here are some of the things you need to know about Atlanta factoring and how it will be helpful to the success of your business.
What is Atlanta factoring?
Factoring is selling your accounts receivable or invoices. If you have clients that have up to the 60-day terms, you are giving your goods and services first, then waiting for payment later. Invoice factoring is a funding solution to receive payments for invoices you get every day or week from an Atlanta factoring company. Then, the factor will process and take the money from your clients.
Types of factoring
There are two primary types of factoring. This includes non-recourse and recourse. With non-recourse factoring, it’s a no credit risk option because you sell all invoices, and the factor assumes all the credit risks related to the approved debtors. Hence, using the creditworthiness of your client to expand and grow your business. In a recourse factoring, you will be liable for the account receivables you plan to factor. If your clients fail to pay the account receivable, you will have to repay the full amount of the factored invoice to the factor.
Advantages of invoice factoring
The apparent advantage of factoring is getting payment faster for pending invoices. As a business owner, you can choose the kind of invoice to factor, how frequent, and how to get the payment. This will keep the cash flow steady and available for running the business. The cash can be used to pay for expenses, make large purchases or expand opportunities. Some of the benefits of factoring include:
- Managing all your account receivable
- Online access via mobile device and desktop
- Easier invoice submission
- Same-day financing with check, fuel card, and bank transfer
- Exceptional client services for you and your clients
- No hidden charges or application
Disadvantage of factoring
Note that there are many things you must consider before opting for factoring as your most preferred financing alternative. Factoring is expensive. Generally, the rate of interest ranges between 2-5 % for the first month. Nevertheless, after that, you may be forced to give a 0.067-0.0125 percent fee for every extra day. To avoid this high fee, find the best provider by diligently choosing a loaning company and familiarizing yourself with the terms and conditions. Get references or search online for alternatives and testimonials. Remember to look up their social media score that can be used to support the lending firm’s image and reputation.
Bear in mind that the market is flooded with Atlanta factoring companies. So, conduct your research well to make sure you hire the best company.