Are you wondering how invoice financing or factoring can benefit your business? Is this a common practice in your industry? First, there is a difference between financing and factoring. With factoring, you’ll sell your invoices to a third party company, so they’re responsible for collecting. Financing essentially performs as a short-term loan with your invoice as proof that you’ll be able to pay the third party back.Â
Any way you slice it, invoice financing and factoring solutions let you get paid on your invoices faster. This means your clients get more time to pay. Here are a few different industries who use financing frequently. Â
Trucking/Transportation
Transportation costs are often unpredictable. Trucks, for instance, are never scheduled to break down; repairs are needed at a moment’s notice. Add in the fluctuating cost of fuel, and you might find yourself without the necessary funds to stay on the move.Â
When you’re stuck with repairs and expenses, exploring your invoice financing options can be the difference between a successful week’s haul, and falling behind while staying parked. Â
Staffing Agencies
Staffing agencies and temp agencies are a necessary middleman between workers and the companies who need them. However, many agencies don’t survive more than a few years in some cases. Experienced, dedicated employees need to be paid regularly, on time.Â
No employee is satisfied to keep working while one organization waits for another to pay. That’s where financing and factoring comes in – the agency can use the money to pay the employee while waiting for the company who received the work to pay up.Â
Manufacturing
Depending on what’s being manufactured, material costs can exceed even the cost of human staff, and that doesn’t even take into account equipment repair and maintenance.Â
There are no excuses when you have orders to fill, and that’s why many manufacturers rely on financing to keep the line moving. They can allow their customers time to pay their invoices while using invoice financing services to pay employees and order materials.Â
Consulting
A lot of consultants and professionals work for themselves, and are responsible for collecting what’s owed from a number of different clients. This can mean they have plenty of money on paper (many invoices issued to clients), but none in their account (clients have up to 90 days to pay).
For those involved in government contracts, government contract factoring can be particularly beneficial in accelerating payments and addressing the unique cash flow challenges associated with this sector.
In the meantime, they have overhead. In order to continue offering their expertise, they’ll use financing to get their money faster.Â
Construction
If you run a construction company, you probably don’t ask that your customers pay you within five days of the job being completed. Here too it is common to give the customer a month – or three – to pay in full.Â
But until then, you have a crew that isn’t going to stick around for the next job if they haven’t been paid for the one they just helped complete. Or, you need materials, fuel, and more to move onto the next contract. Enter invoice financing.
Conclusion
These industries might use invoice financing the most, but it can work for practically any business. If you’re stuck waiting for invoices to be paid, invoice financing is a fast solution that can help you keep going without missing a beat.Â