Increasing financial stability with invoice factoring

Increasing financial stability with invoice factoring

by Curtis Sutherland, VP Accounts Receivable

When your business makes the decision to use invoice factoring, it taps into a valuable line of secured credit that uses a unique resource as collateral: existing unpaid invoices held by your company. While you've already made the sale or completed the service that led to the invoice's issuance, you haven't yet collected - and may not for weeks or even months to come.

Invoice factoring offers your organization the chance to tap into the money owed to you now, offering benefits ranging from addressing an unpredictable emergency to taking advantage of a potentially lucrative business opportunity. As you ponder how your company can use invoice factoring to its advantage, keep these tips for developing financial stability with those additional funds in mind.

Build financial stability with invoice factoring by ...

Dealing with emergencies

A major, unforeseeable breakdown of equipment or building damage not covered by insurance is enough to put many companies in danger of closing. You have invoice factoring on your side, which gives you the quickly accessible funds needed to address the problem without delay and get your business back into a position where it's operating at full capacity.

To make sure you can avoid, or at least mitigate, such issues in the future, start setting aside some profit as part of an emergency fund. The next time an unexpected issue arises, you'll be in an even better position to handle it. And if you still need cash, you can keep using invoice factoring to make sure all the bills are covered.

Investing in long-term improvements

Whether it's vehicles that operate more efficiently and offer many years of service, powerful production line equipment or something else entirely, there are many ways in which you could improve your operations by acquiring new equipment. Invoice factoring gives you the option of getting funding fast and putting it toward such upgrades. You can use several invoices at once to receive the amount of capital needed to make a major purchase, thereby avoiding having to pay interest and other complications.

As long as you can be sure the purchase makes good financial sense, you can use your line of credit to fund these new additions, which can ultimately lead to benefits ranging from increased output to lowered maintenance costs.

Taking advantage of lucrative opportunities

Whether it's bidding on an especially valuable contract or expanding operations into a related but more lucrative field, there are many ways businesses can take steps to improve profitability. When special equipment is needed to bid on that contract or a new piece of machinery has to be in place before expansion can happen, however, many business owners can feel stuck. Without the funding to get the necessary assets in place, it's difficult, if not impossible, to act on these opportunities.

Invoice factoring allows businesses to get the money they need, when they need it. Weeks or months of waiting for payment turns into just a few hours or days before receiving the line of credit. In terms of finding and taking advantage of growth opportunities that funding can make a world of difference.

Bridging the financial gap

Businesses that have strong long-term outlooks and overall sales can still face short-term issues if revenue from one month to the next is uneven or increased costs in a given time period reduce income. While your company should be fine in the coming months or years, the problems it faces in the coming days or weeks could cause major problems with paying bills, acquiring raw materials, marketing, hiring new staff and many other obligations. That's true even when many invoices sit unpaid in the accounts receivable department.

Invoice factoring gives businesses this valuable cash with minimal delays, providing a bridge that helps them cross over with shorter periods of trouble and regain solid footing on the other side. To learn more about the advantages of entering into an invoice factoring relationship with TAB Bank, get in touch with us today.

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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