Maximizing Business Growth: How Invoice Factoring Can Fuel Your Expansion

Owning and operating a business comes with many risks, even if your clients are the ones who should be footing the bill for the services and products you provide. Sometimes, the bills come before the invoices have been fully paid, and this can cause a heavy imbalance in your available funds. Whether you own a small business and you need funds rapidly to cover expenses or you have a large corporation and you’re managing several accounts at once, one thing is for certain. When it comes to invoicing, you will run into issues where the funds aren’t coming in as rapidly as you need them to to keep your business operating smoothly and keep cash flow coming in. When this happens (and it happens to all types of businesses in every industry), knowing what to do and how to navigate invoices can not only help you stay afloat, it can help you keep your business growing. 

What do you do in a situation where your invoices are being left unpaid? Hound your clients to pay their invoices in full or speed up their payment processes? Borrow money to pay expenses and hope your clients pay on time to balance out your increased debt? Increase your rates so you can help cover expenses for invoices that aren’t being paid or that aren’t being paid in full fast enough? Or should you bill for all services in advance to avoid invoicing for things your business has already covered? 

There are several solutions, but they don’t always fit your needs.  Businesses don’t always work smoothly and have invoices paid on time (let alone in advance), and there are many times in which the services or products you provide have lots of upfront costs that you take on as a business owner. When you’re facing financial hardships and invoicing isn’t working out, one thing you can consider is invoice factoring. Learn what invoice factoring is and how it can fuel the expansion of your business in many ways. 

What Is Invoice Factoring? 

Imagine you provide a service to a client for several thousand dollars and you invoice the client for payment in full due in a few months. However, you need money right away to buy new inventory or to buy new equipment. Rather than take out a loan or charge your company credit card, you can sell the invoice to an invoice factoring services company for a discount and receive the funds you need upfront. The invoice factoring company then takes over the invoice and charges your client, collecting a fee for every payment they receive. You get the benefit of having your invoice ‘paid’ right away (minus fees and discounts) and the factoring company makes money on every payment they receive on your behalf. It’s a winning strategy for all businesses involved, and clients continue to make payments as they would normally send them to you. 

How Does Invoice Factoring Fuel Your Business Expansion? 

The more money you have for advertising, marketing, inventory, and market growth, the better you can build and promote your brand and the more you can grow. When you’re limiting your profits by relying on future payments from clients, you’re not allowing yourself to grow as much as you could otherwise. Invoice factoring does the following things to help your business expansion get off to a great start. 

Puts More Money In Your Pocket

When clients pay invoices, they often pay them in installments. This means you have to plan out how you can reinvest your funds even though your business is technically doing well with large projects and expensive contracts. Being able to get a majority of your invoices paid at once puts more money in your pocket, which gives you more borrowing and expansion power as a result. 

Allows For More Realistic Profits

Imagine getting paid for your large projects or ongoing services as soon as they are completed rather than being months behind your profits. When you utilize invoice factoring for your larger invoice needs (calculate the discounts and fees for smaller invoices versus larger ones to see which option benefits you, as you can pick and choose which invoices to factor out), you can realize your profits much sooner so you can match your projected growth with your business expansion needs. 

Gives You The Capital To Invest In Your Brand

Your invoices being paid is what gives you the capital to keep funding your business. The money you bring in is the fuel to keep your brand going strong, and if all your income is on paper or electronic invoices waiting to be paid, you’re not actively fueling your business forward. The benefit of being able to get your invoices paid in full straightaway (and don’t forget, the invoice factoring company takes care of receiving payments from clients), you not only get the capital you need to reinvest in your brand, but you don’t have to invest time and money on keeping track of your clients and their payments as a bonus. 

Wrapping Up 

Invoice factoring makes it easier to manage your clients and their payment plans regarding invoices and puts more money in your pocket. It also gives you more capital to grow your business. If you are struggling with getting your invoices paid and fueling your business’s growth, consider working with an invoice factoring company to see if there are options for you.