Advertising
Advertising

Using Invoice Factoring to Ease the Pain of Net 30

Using Invoice Factoring to Ease the Pain of Net 30

Even the best business managers and owners can feel the pain when clients or customers don’t pay promptly. When the payments stretch to 60 and 90 days before an invoice is settled, businesses that have many customers in that category can suffer under strain that threatens their survival.

Enter the Concept of Invoice Factoring

Although any business may experience a shortfall, when the time to pay employees comes, the cold hard numbers don’t add up, and the bills can’t be paid, a solution needs to be found. With a stack of unpaid invoices, the value of those invoices can be converted to usable funds in a hurry. That is the beauty of invoice financing.

The idea of meeting payroll, a steady expense that impacts lives, can throw a business owner into turmoil. If the payroll isn’t paid on time, employee morale may suffer, employee/employer relations may be strained, and the employee might leave.

Advertising

Finding a way to meet payroll through invoice factoring could keep funds flowing on time. Using invoice factoring could seem like a miracle for the beleaguered businessperson. But, as with any strategy, the owner needs to review the options available, which vary from firm to firm.

How Invoice Factoring Works

  • A business needs money and has unpaid invoices.
  • Approaching the invoice factoring company, the businessperson applies for consideration, usually specifying the amount of invoices, plus details about the business.
  • Upon approval, advances are offered based on the invoice amounts. An advance amount is provided to the business, a percentage of the invoice. The advances range broadly, but it is recommended that the businessperson look for advances in amounts of 85 percent and more.
  • Once the advance is paid, the invoice factoring company retains a reserve amount.
  • When the company collects on the invoice, the reserve is provided to the business minus the agreed upon fee.

Considerations for using invoice factoring include:

Amounts available. What amount do you need to make the payroll or pressing expenses? Can you manage with the amount you’re immediately able to obtain, which can be about 85 percent of the invoice total? Does the firm offering the invoice factoring require a certain credit line minimum amount or require a long-term contract? Avoid anything that entangles you for more than you need.

Advertising

Fees required. Are the fees charged worth the effort? Check for any hidden fees, like an application fee, processing fees, credit check fees, and overdue fees when a client is late in paying. The amounts paid to the invoice factoring firm can vary from less than 1 percent to 5 percent. If the invoice is typically just a few days late and you can find another strategy, would that be less costly and headache inducing?

Turnaround time. Can the funds be obtained quickly? For each day you’re waiting, is it likely that your invoice would be paid? Time to receive funds after approval are shown as early as a day to several days. In contrast to a regular bank loan, payments can be made available within a much shorter time through invoice factoring.

How they treat clients. If you do apply for invoice factoring and are approved, the factoring company now owns your clients’ invoices. They are free to approach your clients. Do they have a track record of treating people well? Does the firm offer “non-notification factoring,” so the client would not know that their invoice is not directly in your hands?

Advertising


Credit worthiness of your clients
. If your clients do not have a clean credit record, it is possible that you might not be approved for invoice factoring. Do you know your clients and their current situation?

Being in business is tough. Entrepreneurs struggle, sometimes monthly, to make the numbers work. With the whole domino effect of businesses relying on other businesses to survive and succeed, a prudent business owner might consider invoice factoring a useful tool.

As with most financial tools, the terms can differ widely for accessibility, limits, fees, and whether contracts are required. Any prudent business owner would also do well to research the firms, their terms, and their reputations before enrolling.

Advertising

Find the right firm with the right terms and your business could benefit — and so could your employees.

Featured photo credit: shutterstock.com via shutterstock.com

More by this author

Who’s at the Wheel? Technology Causing Distracted Driving and Other Stories of Multi-Tasking Is Your Website Costing You Sales? Staying Afloat: Why Kids Should Learn to Swim If You’re a Burned Out Entrepreneur There’s a Solution Common Signs and Symptoms of Depression in Parents

Trending in Work

1 20 Best Places to Work for a Great Career in 2018 2 22 Team Building Activity for Work That Are Fun and Encourage Creativity 3 17 Types of Online Work at Home Jobs that Really Pay Off 4 How to Improve Your Computer Skills to Get Ahead in Your Career 5 How to Answer the Tough Question: What are Your Salary Requirements?

Read Next

Advertising
Advertising

Last Updated on November 5, 2018

20 Best Places to Work for a Great Career in 2018

20 Best Places to Work for a Great Career in 2018

Looking for a job? There’s no doubt to the fact you will want to work with a company that appreciates you for who you are.

Well, good news. The labor market today is one that has peened up with more opportunities for advancement and personal employee improvement. This is partly due to the fact that a lot of companies have been made to understand the value of their biggest assets: the employees.

To wit, here’s a list of companies- across a wide array of industries- that have been able to develop working environments that are healthy and accommodating to workers.

Take a look at these 20 best place to work for a great career:

1. Salesforce, San Francisco, California,

    Salesforce is in the information technology business and the company ranks highest due to their commitment to learning and innovation. They are ready to try new things and everyone with a new idea is always welcome to share it at the company. The company has also been known to exhibit an exceptional approach to alignment.

    Find out more about careers in Salesforce

    2. Wegmans Food Markets Inc.,Rochester, New York

      Based in Rochester, New York, employees have been known to enjoy a sense of purpose from working here. The company has been able to achieve an optimal level of engagement across all working tiers and they’ve been able to achieve great things together. They even do deliveries.

      Find out more about careers in Wegmans

      3. Ultimate Software, Weston, Florida

        Employees get amazing benefits here but that’s not the only reason why this place is so awesome to work. Whenever there is a need or a death of an Ultipeep or any of other family members, the company shows love and support like no other.

        Find out more about careers in Ultimate Software

        Advertising

        4.The Boston Consulting Group, Inc., Boston, Massachusetts

          Development is at the center of anything that goes on here. The business is about people and employees are the company’s biggest asset. Employees are able to challenge the status and also leave impacts on clients.

          Find out more about careers in The Boston Consulting Group

          5. Edward Jones, St. Louis, Missouri

            Edward Jones is admired for their ability to acknowledge history without being mired down by it. The company builds on a solid foundation but there is also a level of flexibility that allows for innovation.

            Find out more about careers in Edward Jones

            6. Kimpton Hotels and Restaurants, San Francisco, California

              Kimpton is a trendsetter in the hospitality industry. The company always strives to try something different and that perspective is welcomed there at all times. Enjoy the weekends with luxury rooms, conformable mattress, furnished and well dressed service staff. A great opportunity for job seekers.

              Find out more about careers in Kimpton Hotels and Restaurants

              7. Workday, Pleasanton, California

                Newbies will find no issues with feeling welcome and at home here as this has always been a core culture component of the IT giant. Everyone is treated like family and this fosters a sense of oneness.

                Find out more about careers in Workday

                8. Genentech, South San Francisco, California

                Advertising

                  Here, employees are encouraged to be themselves. There is a feeling of care, safety, and acceptance that you get here that you can’t get at many firms. The development of an all-inclusive environment has always been foundational.

                  Find out more about careers in Genetech

                  9. Deloitte, New York, New York

                    Deloitte is one of the biggest professional service providers in the world, noted for their focus on constant learning, development and improvement. They invest in their employees and are concerned about their well being.

                    Find out more about careers in Deloitte

                    10. Baird, Milwaukee, Wisconsin

                      Baird is a financial services provide that is known for adopting a “no asshole policy’ which guides the way people relate with and respect each other, regardless of their position on the company’s hierarchy.

                      Find out more about careers in Baird

                      11. Quicken Loans, Detroit, Michigan

                        At Quicken Loans, the views and opinions of everyone are respected and heard. The organization is revered for the amount of investment they put in their team members and everyone looks for ways to grow and be better.

                        Find out more about careers in Quicken Loans

                        12. Capital One, Mclean, Florida

                          Capital One has adopted a culture that encourages employees to take risks and try new things. They foster a healthy work-life balance and associates are challenged to live better lives.

                          Advertising

                          Find out more about careers in Capital One

                          13. Cooley LLP, Palo Alto, California

                            Cooley LLP is a law firm known for their ability to care about the company culture and being able to develop a working environment that is empowering and fun. Cooley is known to go for the best when it comes to their employees, regardless of the occasion.

                            Find out more about careers in Cooley LLP

                            14. Southern Ohio Medical Center, Portsmouth, Ohio

                              The medical center has been known for their propensity to delegate so much to their employees, thereby providing them with the ability to grow and learn on the job. In the end, you get a workplace that is all-engaging and super fun.

                              Find out more about careers in Southern Ohio Medical Center

                              15. American Express, New York, New York

                                American Express is a firm that celebrates wins, no matter how small. Everyone is made to share the same attitude towards service and the people they are to serve, thereby making people care about what they do.

                                Find out more about careers in American Express

                                16. Adobe Systems Inc., San Jose, California

                                  The culture at Adobe Systems is one that encourages employees to develop their own ideas and get a strong viewpoint. As opposed to encouraging competition, work-life balance is fostered everywhere here.

                                  Find out more about careers in Adobe Systems Inc.

                                  Advertising

                                  17. The Cheesecake Factory Inc., Calabasas, California

                                    The Cheesecake Factory rewards dedication and hard work. Promotions come pretty easy, and there is always space for guidance to develop your experience and skills.

                                    Find out more about careers in The Cheesecake Factory Inc.

                                    18. Sap America, Newtown Square, Pennsylvania

                                      If you’re looking for a new career path, SAP might be the best bet for you. The company is adept at recognizing value and transferable skills. And you can always look for a new path while maintaining your employment.

                                      Find out more about careers in Sap America

                                      19. NVIDIA Corporation, Santa Clara, California

                                        NVIDIA is known for looking after even the smallest of things. With even a “pets allowed” policy this company accepts you for who you are, and helps you to work within your personality. Advancement is also fostered, and you are able to collaborate effectively.

                                        Find out more about careers in NVIDIA

                                        20. KPMG LLP, New York, New York

                                          Communication and progressive collaboration are the foundation of this company’s workforce treatment. Regardless of the level you are, someone is always at the ready to help and the company rewards extra effort with gratitude.

                                          Find out more about careers in KPMG LLP

                                          All in all, it’s safe to say that you will be able to find somewhere to apply your skills (whatever they are) that is all inclusive and highly accommodative. Companies today are being made to understand how much they can get when they treat their employees right and this has opened the door to an encouraging work environment for all.

                                          Happy job hunting!

                                          Featured photo credit: Pexels via pexels.com

                                          Read Next