As companies look for ways to expand and improve performance, there are a multitude of areas to consider, including franchising and diversifying. However, initially your business will need to become as financially viable and efficient as possible. Outsourcing invoices and administration processes, as opposed to collecting in-house, can be incredibly beneficial and help your business to grow at a faster rate.
Outsource Invoice Factoring to Grow Your Business Faster
Invoice factoring is a great place to begin outsourcing your administrative duties. Factoring is a simple yet financially efficient system. Your business provides the service/products to the customer, along with the invoice, but rather than waiting for payment, you then forward the invoice to your chosen financial company who will carry out this process on behalf of your business. Upon receipt of the invoice, the finance company will pay a pre-arranged percentage of the invoice value in advance, providing the remaining outstanding balance when it has been collected from the customer. There are some companies out there that offer a way to view different rates provided where you can view the different types of Invoice Financing offers out there to match your needs.
In-house collection, on the other hand, can be more costly and may hinder growth as more of the working day involves a greater amount of paperwork and requires time dealing with admin. Furthermore, the time period that elapses when waiting for payment may limit the amount of orders that can be fulfilled, hampering the total amount of supplies that can be purchased, or reduce the overall quality of service your business is able to provide.
Let Them Do All The Follow-Up
Rather than spending the company’s precious time chasing up and collecting payments from invoices, you can outsource them to a third party who will do all of the leg work. For a designated fee, this asset-based financial solution can allow your business to receive funds, prior to customer payment. As discussed, the wait period can delay growth, but outsourcing will free up capital and remove the wait, as well as provide extra time that can be focused upon company growth and development.
In addition, since the credit crunch and economic decline, invoice factoring has become a popular financing option with banks and businesses due to the fact that this type of loan is mostly dependent upon invoice collateral. Therefore, this mode of lending is easier to secure than traditional methods such as a bank loan.
To summarise, the pros of outsourcing invoice factoring are: