The short answer is yes. Factoring is one of the most flexible types of business financing you’ll find. It’s a great option for businesses with any type of need for a quick infusion of cash. It works if you need the money to pay your bills this month, buy new equipment, hire new employees, invest in a new location or product and so much more. 

The Basics

This is a simple type of business financing that won’t hurt your credit score. If you have outstanding invoices, you can sell them at a discount to a third party called a factor. They’ll give you the majority of the invoice’s value now, and take on the responsibility of collecting from your customer. If you’re a newer company or don’t have much credit history you shouldn’t worry since the transaction fee is determined by the creditworthiness of your customer, making this an easy kind of financing to receive. 

Who It Can Help

Most types of businesses can benefit from utilizing this kind of financing. If your industry can suffer from long invoice lifetimes, you can shorten that turnaround time by selling your outstanding invoices and getting the majority of its value now, instead of the due date listed. Or maybe technology moves very quickly in your industry, and you need to keep on top of that in order to stay relevant. You can use factoring to get a sudden influx of funds to make those purchases and keep up to date. Some industries are very seasonal and need to increase production or labor before the profits start coming in, making this an excellent way to make those changes in anticipation of demand. 

These are just a few examples of the types of industries that can benefit from this kind of financing. Even within these examples, the applications are numerous. There aren’t many types of financing that are more flexible than this. Since you can choose which invoices to sell, you can get the best fees by selling only the invoices to the most reliable customers. There are no limits to how you apply the funds you receive, and you can typically get those funds much quicker than if you sought a traditional bank loan. You also benefit because you’re not taking on debt by selling your invoices, so there’s no risk to your credit score. 

So if you’ve ever heard of factoring but thought it wouldn’t work for your business, it might be worth taking a second look to see how this financing can help you.