Service providers have grown astronomically over the last 20 years in the United States as the nation’s economy has shifted away from manufacturing products to providing a very wide range of services. Whether these are services provided to businesses, such as computer networking or tax advice, or services provided straight to a consumer, such as legal advice, health care, or plumbing work, service providers represent a very large sector of our economy.
Companies providing services of all kinds can run into financial challenges when they have to wait for customers to pay them. They might have a strong pipeline of jobs booked or a large number of customers, but it can be difficult to keep up with fixed expenses when customers will not be paying for their services for 30, 60, or even 90 days. This is when invoice factoring can help a service company bridge that gap between completing a job and getting paid for it.
A factoring company can buy a service company’s invoices and pay them the bulk of the amount upfront, with the balance sent to them, minus a small factoring fee, when the customer pays the invoice in full. The service company can use the cash to cover payroll and overhead costs or to hire staff, buy inventory, expand their facilities, or try new sales and marketing strategies. Factoring accounts receivable can be a convenient and reliable way to grow a service business. More and more service providers are finding that factoring is an easy and affordable funding source and they like being able to access the cash that is due to them without having to take out a loan or incur debt.
Factoring Tips for Service Providers
Factoring companies with experience working with other service providers can help you keep up with the competition and plan for the future. Look for factoring professionals willing to tailor a cash flow solution that will meet your company’s needs.