Companies of all sizes use invoice factoring (a.k.a accounts receivable financing) to get the capital they need to grow their businesses. Not only has invoice factoring been around for a while, there are numerous benefits to utilizing it, like:
- No debt created with invoice factoring
- Start-ups and younger small businesses qualify
- Save money and time on invoice processing
- Invoice factoring is flexible
- Factoring companies usually have savings programs and a wealth of industry knowledge
- Quick and easy to set up your account
- Professional debt collection services
- It can help improve your credit
It’s interesting… we sometimes hear our new factoring clients ask, “Will invoice factoring hurt my relationship with my customers? Will they think my company isn’t doing well?” Actually, we find quite the opposite. Our clients’ customers tend to like when they factor their invoices because of the several benefits, including:
Ease the accounts payable process
Many of your customers are likely larger firm that have worked with factoring companies before. They understand that a factoring company knows the ins and outs of the accounts payables/receivables process and has years of experience in working with companies for collections. This intimate knowledge of the invoice process makes their jobs easier.
They know that companies use invoice factoring to accelerate growth and growth is good
That same experience of working with factoring companies means that most of your customers understand the cash flow benefits you’ll see with factoring your receivables, and that they’ll translate into a healthier business. It goes without saying that they’d rather work with a financially healthy business than one struggling to manage day-to-day cash flow.
Experience with customer service deepens relationships
Most seasoned factoring companies are positioned to deliver the highest levels of expertise and service – not only to you but also to your customers. This simply means that their job is to not only help you manage cash flow, but manage customer relationships on your behalf. This is certainly in the factoring company’s best interest, but also yours as well!
If you’re looking for ways to improve your cash flow and drive growth, but aren’t sure what your customers will think, rest assured there are benefits to be had on both sides of the factoring table.
Non-Recourse Factoring
Another option to consider when shopping for invoice factoring is non-recourse factoring. Unlike traditional factoring, in non-recourse factoring, the factor assumes the risk of non-payment by the original debtor. If the debtor doesn’t pay the invoice, the business is not required to repay the factor. This method allows businesses to obtain immediate liquidity without the liability of potential non-payment by their customers. Not all companies that offer non-recourse factoring cover the same liabilities. You can find some things to look out for in our blog Top 8 Things to Understand Before Signing A Non-Recourse Factoring Agreement.
ABOUT eCapital
At eCapital, we accelerate business growth by delivering fast, flexible access to capital through cutting-edge technology and deep industry insight.
Across North America and the U.K., we’ve redefined how small and medium-sized businesses access funding—eliminating friction, speeding approvals, and empowering clients with access to the capital they need to move forward. With the capacity to fund facilities from $5 million to $250 million, we support a wide range of business needs at every stage.
With a powerful blend of innovation, scalability, and personalized service, we’re not just a funding provider, we’re a strategic partner built for what’s next.
