Few industries change as quickly as technology companies. Companies start up quickly and systems and applications that were not known last year can dominate the technology scene today. To keep up with the competition, companies work at a very rapid pace. While tech company owners often have great ideas, strong business plans even and a solid pipeline of clients, they tend to face cash-flow challenges.
Whether they are developing and selling software, mobile apps, or consulting services, it’s not uncommon for technology companies to wait 30, 60 or even 90 days for payment from customers. This is when invoice factoring can be helpful. A factoring company can bridge the gap between the invoice date and the payment date. By advancing the majority of the invoice amount to the technology firm, the factoring firm can help owners pay their staff on time and cover their other overhead expenses.
Factoring can help a company increase its cash flow and enable it to take on larger clients and clients with longer payment terms. Having access to traditional funding sources, such as banks, can be challenging for new tech startups without long credit histories or extensive collateral. Factoring is an excellent choice for these kinds of businesses because a factoring company evaluates each application on the basis of the applicant’s customers’ credit record. Tech company owners find factoring to be an affordable and convenient funding solution without taking on loans or incurring debt.
Factoring Tips for Technology Companies
Look for a factoring company with experience in working with your industry. Due to the rapid growth of the technology sector, you want to work with factoring professionals who are flexible and can tailor a factoring program for you that will meet your needs both today and into the future.