It’s a common problem for businesses of all sizes: waiting for customers to pay their outstanding invoices. Most invoices are set to payment terms of 30 to 90 days, meaning that from the day an invoice is sent to your customer, you’re unlikely to see that money for at least a month, if not longer. These long payment cycles put many businesses in a constant cash crunch, making it hard to keep up with critical expenses like payroll, utilities or inventory. Often, that prevents businesses from investing in growth opportunities or maintaining day-to-day operations that keep everything on track.
That’s where invoice factoring comes in. It’s a form of cash flow financing that helps your business turn your outstanding invoices into cash immediately. By getting paid faster, you’re able to put that cash you’ve earned to work, paying your expenses and employees on time and growing your business without the heavy burden of delayed customer payment.
This guide will help you understand what invoice factoring is and how it works, and determine if it’s a good fit for your business. If you have questions as you read, feel free to reach out with any questions by submitting the contact form at the bottom of this page.