Factoring Line of Credit Benefits

A factoring line of credit has benefits beyond the immediate cash flow solution for which businesses are searching. As we have discussed elsewhere, Factoring functions like a line of credit, but is different from a line of credit/loan secured by accounts receivable in that it is actually a sale of specific accounts receivable/invoices to the factoring firm. (Go to our main Factoring area on the Navigation Bar at left for more details on how this works.)

In addition to receiving immediate cash within 24 hours after submitting invoices, companies who use factoring also benefit from:

  • Taking advantage of vendor discounts: Many vendors offer a slight to significant discount if invoices are paid within 10 days.
  • Reducing overhead by having your factoring company handle tasks such as processing invoices, collections, depositing checks, entering deposits in your accounting ledger and following up on past due accounts.
  • Increased cash availability with no additional debt. Unlike a traditional unsecured small business loan, a factoring line-of-credit is not a liability but rather a sale of short term assets.
  • Having no limits to your account receivable line of credit: as your sales increase, so does your credit line--unlike an unsecured small business loan which has a cap
  • Providing access to capital for young companies who lack the financial track records required by traditional lenders.
  • Ease of qualification. Companies with operating losses or who have even filed for bankruptcy may be able to qualify, unlike traditional unsecured small business loans.
  • You maintain control of your business without giving up equity (as required with venture capital)
  • The ability to fund expansion and growth
  • The factoring company can check and monitor the credit of your existing and future customers, helping you to establish appropriate credit limits.
  • Creating a better business rating with your suppliers and vendors. With a more predictable cash flow, your company will be able to pay bills and expenses in a timely manner, thus potentially increasing your rating.

Get Free Quotes for Factoring Line of Credit

Save time and money by receiving multiple, independent quotes for Factoring services. Best Business Payroll has arranged with Buyer Zone to provide free, customized estimates from a variety of pre-screened Factoring companies– with no obligation to buy. Simply answer a few questions about how you will be using payroll time clocks to get the best solution to your needs.

Request for Factoring Services Quotes:

The most common industries serviced by factoring companies include: Manufacturing, Staffing, Trucking, Tech Consultants, Oil and Gas Services, Distributors, Import/Export, Cell Tower Companies, Solar/Wind Power, Cell Tower Companies, Construction Services

Businesses should consider a factoring line of credit when:

  1. The business has just begun and is reliant upon cash flow.
  2. Ownership is considering increasing sales.
  3. The company relies on a few major clients.
  4. The business wants to take advantage of vendor discounts

The bottom line is that a factoring line of credit can be a powerful tool in leveraging your accounts receivable into a predictable cash flow solution for your business.

› Factoring Benefits