Factoring has been used almost since the dawn of commerce to speed up cash flow and enable growth for businesses. However, with so many different factoring services available, choosing the right one for your business can be overwhelming. Before you pick a service, it helps to understand how factoring companies operate, what they offer, and how they differ from one another.
What Is Factoring?
The best place to start is with the basics, because not all businesses understand factoring, or even know that it is available in their respective industries. When a business issues invoices, there is usually a window in which customers can make payments on the balance owed. The standard payment schedules in today’s economy are marked at 30, 60, or 90 days. So a customer that received products or services has 30 days or more in which to pay the balance they owe before the invoice ages out to collections. In theory, the staggered schedules are to ensure that a business has a constant stream of revenue. In reality, the staggered payment schedules translate to long periods without revenue, as customers typically wait until the end of the window before making payments. This results in a strain on cash flow, as businesses scramble to make payroll and cover overhead while no revenue is coming in. Factoring remedies this situation by converting unpaid invoices to cash quickly, so businesses are never waiting on outstanding customer invoices, and they can stay on top of financial obligations. During periods of high sales, businesses can leverage factoring sales to accelerate cash flow and build up capital for growth plans.
Turnaround Times on Factored Invoices
The main thrust of using factoring services is to shorten or eliminate staggered payment schedules. Since not all factoring services are the same, the turnaround times can vary greatly. Some factoring companies can turn invoices into cash in a couple of weeks. Some claim to make funds available within five business days. Single Point Capital offers factoring services that convert unpaid customer invoices into cash and make funds available within a single day. That means businesses can access revenue from their unpaid invoices in under 24 hours from the time they submit their receivables to Single Point Capital.
Factoring Plans
Many factoring companies take a rubber stamp approach to their client. Invoices are submitted, the factoring companies take their share, and the rest is delivered as revenue. Single Point Capital uses a different strategy. We work directly with our customers to understand their needs. Our team then creates a customized plan to help each of our clients reach their goals. The ability to tailor solutions and talk with a real human being goes a long way with businesses that need factoring services. Our account managers are always available to answer questions, offer advice and guidance on factoring, and more.
Transparency Is Essential
As with any transaction, businesses want to know what they are getting and how much they are paying. Factoring should be no different. Like mobile carriers, there are factoring companies that will add on hidden fees that can eat into revenue and negate the financial advantages of factoring services completely. Single Point Capital is upfront about pricing for our clients, so they know exactly what to expect when they submit their unpaid customer invoices for factoring.
Delivery of Funds
Not all factoring companies deliver funds from invoices the same way. Some will send out checks to businesses, which can get lost in the mail or delay the ability to access revenue. Some will hold onto funds until a certain threshold is met before making funds available to their clients. Single Point Capital, as mentioned above, makes funds available within a single day. Additionally, we will deliver funds via wire, ACH, or any other method that works best for your business. We believe in working for our clients to provide the fastest and most direct path to their revenue.
Start Factoring Your Unpaid Invoices
Single Point Capital is a leader in factoring services for businesses nationwide. We offer comprehensive invoice factoring and work with our clients to provide customized strategies so they can reach their goals. Contact our offices today to accelerate your cash flow and get fast access to revenue from your receivables.