Thursday, December 2, 2021

The main benefits of invoice factoring for manufacturing companies

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Funding your new business is one of the most essential components to obtaining clients, building your reputation, and staying afloat during slow periods. If you find that you do not have enough cash flow to pay vendors, pay employees, and invest in new opportunities during challenging times in your business, you need to find a financial funding method that can keep you on your feet.

Manufacturing businesses need immediate funding to help pay their customers, clients, coworkers, and suppliers. Without cash flow, there will be no capital to invest in new chances, fix any expensive equipment, pay employees, and keep clients who are concerned about your financial standing.

Furthermore, putting forward a good face to the public that you are a successful business is an absolute must to build trust and widen your target audience. However, if you are not able to pay your bills on time, your reputation will suffer. So what is the best way to fix this issue? We have a solution that will work for all manufacturing companies.

What is manufacturing factoring? Work with a reputable company like factorfinders.com to help your business!

Luckily for businesses in all sectors, factoring can be used for various companies and different niches. Just like it can be used for the transportation industry, like in trucking businesses, factoring can be used for manufacturing companies to stay afloat, pay clients, pay employees, and earn new clients.

Manufacturing factoring is the process of selling your company’s invoices to a factoring company for an advance. Need an example? It’s okay - this can be confusing at first for new clients and new businesses who need cash on the spot. Fortunately, the process is actually quite simple and easy for new entrepreneurs to figure out.

  • For example, say you own a manufacturing industry, and you have hit a rough patch. You may be struggling to gain clients since you can’t afford to pay for the products or services they need. Furthermore, you may not have any constant cash flow to pay for new marketing strategies to broaden your target market and attract new customers. In addition, if you don’t have capital, you can’t pay vendors, pay coworkers, or pay employees to continue doing their jobs.
  • In this case, you need to use a factoring company like factorfinders.com to help give you immediate cash on your invoices. If Client A owes you $10,000 and they are overdue on payments, you can sell your invoice to the factoring company that will provide you with cash - nearly on the spot. The cash advance is typically between 1-5 days after submitting the invoice, meaning you can pay people before the end of the work and get out of any bonds.
  • In the case of $10,000 from Client A, the factoring company will usually pay you between 75% and 95% of the invoice amount. In this specific instance, it would be between $7,500 and $9,500 you would earn by selling your invoice! You can use a reputable company like factorfinders.com to make a high percentage rate on your invoices.

Although you may think that manufacturing factoring is just like a loan, it is similar - but differs in many ways. With a bank loan, there is a lengthy approval process that can take weeks or months to complete. In addition, the approval process is more stringent and strict than that of a factoring company. Banks typically require a high credit score and collateral to approve a loan, whereas a factoring company does not require this information.

Invoice factoring for manufacturing companies solely transfers your receivables into cash that you can use on the spot. Your receivables are the unpaid invoices showing your worth as a business. If you did over $50,000 worth of work on your last invoice sheet, the factoring business would see that you are lucrative as a company and agree to pay you cash for your services.

This immediate cash can be used to cover overhead costs and daily operation expenses so you can continue running as a business. Without constant cash flow, you would not be able to pay for the day-to-day operations of your manufacturing business.

Instead of waiting for the cash flow to arrive as you would with a bank loan, manufacturing factoring companies help give you cash within a few days to ensure you can maintain a positive reputation in your industry.

Benefits of manufacturing factoring companies

So - what is the real benefit of working with a manufacturing factoring company like factorfinders.com?

Fast cash flow

Unlike a traditional bank loan that can take weeks or months to come through to help your business, you can immediately enjoy the benefits of constant cash flow, paying your vendors, improving your business standing, building your reputation, earning new clients, and expanding your target market.

Instead of waiting 30, 60, or 90 days for your clients to pay their unpaid invoices, you can rest assured you will get near-immediate payment from your manufacturing factoring company. Since most invoice lengths are 30, 60, or 90 days, clients may take up until the very last day to pay you - this means you can wait almost 3 months for payment.

If you need to pay for daily costs, waiting 3 months for payment is no good. In this case, using manufacturing factoring companies is the best bet for you. Receive as much as 95% of your invoice in as little as 24 hours from the date of your submission! Even with just 75% of your invoice, you still get immediate cash credited to your account or fuel card.

Business-friendly

Manufacturing factoring companies are easy to work with and make it simple to communicate with them online, making the customer experience seamless and easy for new business owners. You can email or fax copies of your invoices securely over the internet, so you don’t have to meet in person or do anything over the phone. This makes it easier and quicker to send your information and makes it faster for you to get paid!

This eliminates the need to wait for mail through the post office, which can be delayed by holidays or other events. Instead, emails arrive almost instantly, ensuring your manufacturing factoring company receives your invoices the exact minute or hour you send them.

Increased working capital

The third benefit of using manufacturing factoring is the increased work capital to cover your daily expenses, greater investments, marketing promotions, and other repairs and resources needed to grow your business. If you find that there is equipment that needs to be fixed, you can’t do so unless you have the capital - fortunately, with manufacturing factoring, you have just that!

There are no restrictions, limits, or upper ceilings regarding where or how you can apply your cash for your specific business. This means you can choose where you want your funds to go without any necessary direction from the manufacturing factoring business - if you need to pay for repairs, you can do so. If you need to invest in a new product, you can do so as well.

Keep your balance sheet clean

No one wants to see debts or unpaid amounts on their balance sheet. Any obligations that you have can hurt your credit score and reputation later on in the business, although it may seem like not a big deal at the time. However, any unclean balance sheets can come back to haunt you later in your business’ life. Keeping your business debt-free at the outset is the best way to earn new clients and ensure your credit does not dip down past the point of no return.

Back-office help

Lastly, a manufacturing factoring company can help you with back-office and housekeeping work. Instead of having an employee for secretary work and balancing the invoices, you can rely on a manufacturing factoring company to take care of this hard work for you. This way, you can allocate your resources and manpower to more essential matters about your business.

Conclusion

As you can see, using a manufacturing factoring company is a great way to fund your business during tough times. To earn working capital, create a constant cash flow, acquire new clients, build your target audience, and expand your desired client base, you can use the funding to stay above the red line.

Instead of feeling like you should go into debt as a new entrepreneur or small business owner, you can make an intelligent decision in using a trusted funding company to help you stay positive. New businesses are prone to going into debt since they have less capital and cash flow than established businesses - however, this doesn’t mean it has to be the end of the road for you.

Hiring a manufacturing factoring business can help you earn cash flow, make intelligent business decisions, keep your current clients, earn new clients, and keep a good standing in your industry for an enhanced reputation.

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