It’s not difficult to send an invoice and collect a payment, which is why most companies start out doing that in-house. However, collecting on your receivables is a process that can be easily outsourced. With invoice factoring, you can get paid faster without having to deal with receivables servicing in Madison, WI. In this article, you’ll learn about 4 of the reasons why companies choose to sell their invoices.
Long Payment Cycles
In the corporate world, it’s customary to pay 30, 60, or even 90 days after you receive an invoice. That means a business can use the products or services, resell them, and then pay the original vendors and contractors. Some industries have even longer payments cycles of 120 days. That’s a long time to wait to get paid.
If your customers won’t pay for several months until after you send an invoice, your business is a great candidate for invoice factoring. With this process, you can get paid within 24 hours of sending the invoice and use the money to pay your expenses, including general operating costs and payroll.
Some customers take longer to pay than others. They may not even pay your invoice when it’s due, which puts a huge financial strain on your company. The longer you have to wait for your payment, the more difficult it becomes to pay your ongoing expenses and buy new products. To avoid this problem, you can take advantage of invoice factoring and receive cash right away.
Unexpected expenses can crop up anytime, both for households and businesses. If one of your company vehicles needs extensive repair or machinery needs to be replaced, you may find yourself in a sudden cash crunch. In this case, it would be expedient to get paid for your outstanding invoices without delay – without pressuring your customers to make an early payment. When you take advantage of invoice factoring, unexpected expenses won’t put a big dent in your budget. You can still make payroll and purchase new inventory without going into debt.
Occasionally, you may run into different investment opportunities for your business. It could be that a product or raw material you purchase frequently is suddenly available at rock-bottom prices, but only if you can pay right now and buy lots of it. With invoice factoring, you can take advantage of these deals and generate more profit down the road.
There are different reasons to choose receivables servicing in Madison, WI, and your company may benefit in other ways than the business next doors. But one thing that this method always offers is control over your cash flow and when you get paid.