The Advantages of Factoring in Good and Bad Economic Conditions

The economy can take some wild turns and it has a history of peaks and valleys. Still, businesses need access to working capital throughout the highs and lows in order to thrive and grow. Factoring offers a number of advantages to businesses, regardless of economic conditions.

Factoring in Strong Economic Conditions

During strong economic conditions, businesses can roll out new products and services, expand their reach into new markets, and act on opportunities for growth. However, turning to debt-based financing to carry out those plans can be risky, even in the best of times. Interest rates can fluctuate, forcing businesses into higher payments, which can disrupt accounting and budgeting. Additionally, if an economic uptick suddenly becomes a downturn, existing loans can place a strain on finances. By using factoring services when the economy is strong, businesses get faster access to revenue. Factoring converts unpaid receivables into cash quickly, so businesses can build up growth capital without taking on debt or lowering their credit ratings.

Factoring in Uncertain Economic Conditions

When economic conditions are less favorable, businesses need to maintain a healthy cash flow to weather the storm. Lenders raise their requirements to place most of the risk with borrowers. Clients tend to wait longer to make payments on receivables with staggered payment schedules of 30, 60, or even 90 days. Some customers will let invoices age out to collections. Factoring provides a solution to all of these issues. Because factoring turns unpaid invoices into cash quickly, there is never a lag in payments, and receivables never get a chance to age out to collections. Since factoring doesn’t place debt on the balance sheet, businesses can maintain a strong cash flow and build up capital to cover expenses without relying on debt-based financing. Factoring can help businesses successfully pull through an economic downturn.

Factoring for All Economic Circumstances

Single Point Capital offers fast and transparent factoring services nationwide. Whether you are looking to grow your business, or if you are trying to cover expenses during uncertain economic conditions, we can help. Our factoring services provide funds in a single day, so you can get access to the capital you need to stay competitive and successful through any economic climate. Contact Single Point Capital today to get started.