Invoice Factoring is a quick and easy way for companies to get financing for fulfilling their expansion plans or increasing market demand. Unlike traditional loans, the procedure of getting this kind of financing is simple, as it does not include a lot of paperwork or supporting files such as audited monetary statements. Utilizing invoice factoring companies can further simplify the procedure in numerous ways. Here is a take a look at how using an invoice factoring company can help.
In favor of using this kind of funding for working capital needs is that it is quick. All a small business has to do is sell its product and services and draw up an invoice on the consumer. This invoice is then sent out to the invoice factoring company where its authenticity is validated and when this is done, the business can get finance for approximately 85% of the invoice value. The entire process from confirmation to disbursement of funds takes less than 24 Hr in many cases.
Another benefit of using an invoice factoring company is that the business does away with the need for financial obligation collection. Although the factoring company charges a charge for collecting the financial obligation from the debtor, the quantity that the business saves in terms of money and time spent in making calls to their debtors to request payments is decreased. Given that the invoices are sent out to the invoice factoring company, they will undertake the job of following up with the debtors and gathering the payments from them. As a result of the time saved in debt collection, the business can direct the efforts of its staff members to areas that are better such as sales or customer service.
It assists the company look financially healthy. The company no longer needs to be dependent on its capital to pay off its creditors and get the 2% discount rate for which they are qualified if they pay within 10 days. This can result in an improvement in its capital and increase the self-confidence of financiers.
The last benefit of using an invoice factoring company depends on the nature of the agreement that the business participates in. In case of a contract that is given on non-recourse terms, the business need not stress over the eventuality of their invoices developing into bad debts. The invoice factoring company can not take action against the company for recovering the bad debts if there is a non-recourse clause in the contract. American Prudential Capital is the one you should look for a Houston factoring company.
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American Prudential Capital
American Prudential Capital, Inc. exists to serve by enhancing value. We believe that small business is what has made the United States great and will continue to be the backbone of this country. We want to help small businesses finance growth and expansion while facilitating the company’s own business processes of complete, accurate invoicing and professional, timely collection of accounts receivable. American Prudential Capital is a privately-owned, service-oriented commercial finance company offering alternative funding.