And for that reason, you don’t have to concern yourself with traditional collateral. With invoice factoring, you’re not borrowing money. While you have no intention of this happening, you never know what could go wrong in the future. This is property - such as real estate, vehicles, inventory, or equipment - that the bank can repossess if you default on your loan.
With a secured business loan, you’re required to provide the bank with collateral. Furthermore, there’s no lengthy application process (with the chance of a denial). Not only does this give you instant access to funds, but you also avoid interest charges. Instead, you’re securing funds in advance in exchange for a portion of your accounts receivable.
Invoice factoring isn’t the same as borrowing money. However, before you go down this path, you should familiarize yourself with the pros and cons. When you need access to money, borrowing from a bank or credit union is often the first thing that comes to mind. You can then use available funds for everything from paying suppliers to investing back into your organization.Īlso, as your business grows, so does the ability for you to generate more cashflow via invoice factoring. This is one of the best - if not the best - ways to improve cashflow. With invoice factoring, you give up a small portion of receivables for access to immediate cash. In fact, you could find yourself waiting for months on end - often well past the due date - for funds to arrive. And while that may be the best option at times, it doesn’t do you any good from a cashflow perspective.
You have the opportunity as a business to send invoices and wait for payments to arrive. Invoice factoring benefits vary from company to company and industry to industry, but there are some that generally remain consistent. By taking this approach, you know you’re making a financial decision that will benefit your organization in both the short and long term.
#Cost of invoice factoring professional
They do not necessarily reflect the opinions of National Bank or its subsidiaries.įor financial or business advice, please consult your National Bank advisor, financial planner or an industry professional (e.g., accountant, tax specialist or lawyer).The benefits of invoice factoring run deep, but you shouldn’t go down this path until you’re 100 percent sure that it’s right for your business. Views expressed in this article are those of the person being interviewed. The Bank cannot be held liable for the content of external websites or any damages caused by their use. The hyperlinks in this article may redirect to external websites not administered by National Bank. The details of this service offering and the conditions herein are subject to change. This article is provided by National Bank, its subsidiaries and group entities for information purposes only, and creates no legal or contractual obligation for National Bank, its subsidiaries and group entities. National Bank and its partners in contents will not be liable for any damages that you may incur from such use. The contents of this website must not be interpreted, considered or used as if it were financial, legal, fiscal, or other advice.
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