Why invoice factoring is such an effective business lending choice

by Curtis Sutherland, VP A/R Financing

Most businesses reach a point where they need some outside funding to address a wide range of issues, from seasonal peaks and valleys in revenue to securing the equipment needed to complete a potentially lucrative project. How your company accesses this financing, the approval process tied to securing it and the ability, or lack thereof, to receive additional money are all important considerations. Companies that carefully deliberate and identify a funding option that makes sense for their needs position themselves for success.

At TAB Bank, we believe invoice factoring is a uniquely effective choice for business financing, offering a combination of benefits that help companies across the modern economy secure the money needed to realize their goals. Let's look at what invoice factoring is and what sets it apart from other financing options.

What is invoice factoring?

Invoice factoring is a simple process that gives you the power to take unpaid invoices and turn them into the funding your business needs. Specifically, invoice factoring uses invoices for products and services already provided as collateral for a line of credit that your financial institution extends to you. You don't have to worry about using mission-critical assets like equipment, real estate or inventory as tools to secure your financing. Instead, you use one specific resource that, for many businesses, is consistently replenished as time goes on. Additionally, your company can increase its line of credit by using additional invoices to increase the amount of credit available.

This combination of limited, clearly defined scope for the collateral tied to the line of credit and the ability to increase it as you deem necessary is powerful, to say the least. If your company requires a short-term infusion of cash due to an unpredictable emergency or wants continuing access to a line of credit for years to come, invoice factoring can capably address that need.

What makes invoice factoring an effective choice for business financing?

The flexibility of invoice factoring is a clear advantage, allowing businesses to develop a line of credit that suits their individual needs. Instead of being locked into a specific amount, as is common with a loan, or facing the credit limits that come along with many business credit cards, your company has far more control over the process.

The speed with which you can secure invoice factoring is another important consideration. Strong owners and leaders regularly plan ahead and develop contingencies for dealing with emergencies. But even then, some issues are truly unpredictable. From a rare natural disaster to a twist of fate that leaves a company especially vulnerable or primed for a major opportunity, there are many instances where companies need money quickly. TAB Bank offers an approval process that can be completed in minutes, with same-day funding possible under certain conditions, including credit approval. When time-sensitive needs strike, invoice factoring can prove to be a fast and efficient response for quickly accessing the funds you need.

As part of our effort to build strong relationships with all of our partners, we also include a dedicated relationship manager in all invoice factoring agreements. Your relationship manager will help your company navigate the process for securing invoice factoring, as well as address your unique banking and financial needs. With this assistance, your company can make the most informed choices possible in terms of invoice factoring, as well as learn about other potentially beneficial banking and financing options. To learn more about what TAB Bank and invoice factoring can do for your business, get in touch with us today!

If you are looking for more information regarding accounts receivable financing you can find it in  our ebook titled, When do you know you need A/R financing? You can access it by clicking on the tile below.

About the Author

Curtis is an accomplished banking executive with over 15 years of commercial banking experience with a focus in structured finance. Areas of expertise include factoring, asset based lending, equipment loans, inventory lending, commercial treasury services, and the uniform commercial code (UCC). History of excelling in a fast-paced growth environment, managing organization change, and attaining superior customer service levels. Ability to leverage technology and human capital to facilitate business excellence and competitive advantage. Experienced in cultivating and maintaining key relationships with clients, executives, shareholders, and strategic partners.

Curtis has gained invaluable experience while successfully managing a rapidly expanding portfolio through organic growth and company acquisitions. Offer comprehensive credit discipline and business acumen relating to portfolio management during expansionary/contracting economic cycles. Demonstrated ability to recognize competitive opportunities to capitalize on current market conditions. Exceptional sales and marketing skills, along with a proven ability to learn new products, theories, strategies, and tactics – all while retaining the foresight to stay abreast of rapid changes in technology, evolving markets, and industry trends. Extremely well networked with industry professionals, trade organizations, brokers, attorneys, and potential clients. Proven credit discipline and risk mitigation strategies with the lowest loss ratio in the factoring industry.

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