You’ve just finished that big job you worked so hard to win and complete. The profits you make can be put back into your business to help launch you into a new and exciting future. You can now invest in that equipment you need or the personnel that will help to take you to the next level. Except…
It is common business practice for companies not to be expected to pay for invoices for days after it is received. Or weeks, or even months. Indeed, it is fairly common for payment for invoices to be due some 3 months after they are received. While this may not be a problem for large companies with a lot of money in the bank, it is far more difficult for smaller businesses.
Is there a solution to the problem? The answer to the question is a simple yes!
Having to wait for so long for a payment can play havoc with the cash-flow of a small company. It can mean that future projects need to be put on hold, that investing in equipment needs to be delayed and even that it can be difficult to pay staff. This is completely unfair considering the business is waiting on money that is rightfully theirs.
The good news, though, is that there is a solution. Single invoice factoring allows you to get paid on your invoices quickly, usually within 24 hours. This allows small companies to pay their bills and work on building for the future. This is a godsend to many small businesses that would otherwise be stifled by the lack of cash-flow in their business.
How it Works
Single invoice factoring works by helping you to find somebody to pay the invoice on your client’s behalf. This means no more waiting for you to get the money. Most of the money, usually around 90%, is generally paid to you within a day or two. Your funder benefits by taking a small cut from the remaining sum when the invoice is due. This means that you get access to your money quickly, while the funder also gains from their part of the deal.
In addition to the inconvenience caused by long waits for invoices to be paid is also the management headaches that can be caused. Chasing up invoices can be a frustrating and time-consuming business. It can take up a great deal of your time when you have other pressing matters that need your attention. It can also involve having to deal with uncooperative people.
With single invoice factoring, however, the job of chasing down invoices is taken away from you. The funder will take on the responsibility for this, leaving you with getting on with the running of your business.
One common way of overcoming the cashflow problem is to take out a loan. While this can obviously help you in the short term, it is also not without its drawbacks. The main drawback being that you will have to pay it back again. It will need to be paid back with interest and, quite often, you will need to borrow more than you actually need in order to be granted a loan. Plus, of course, there is the matter of what happens when the next long wait for a payment arrives. Is there enough left over from the last loan to cover the wait? If not, might this mean another loan is needed?
This can potentially lead to spiralling debts, and this can be devastating to small businesses. It is also often so unavoidable. With single invoice factoring, there is no need to borrow above what is needed and there is no need to have interest adding to mounting debts. Also, there is no need to take out more loans every time you are waiting on a payment. Instead, you simply gain access to what is rightfully yours.
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