Eagle Business Credit
invoice factoring Macon GA
How Does Invoice Factoring Work?
Every business must manage its cash flow to continue operations. In fact, you could make a huge profit for the year and still go bankrupt if you don’t get the cash when you need it. That’s why companies turn to invoice factoring in Macon, GA. But how does it work?
Invoice the Client
To take advantage of invoice factoring, you must have clients with unpaid invoices. That means you still have to sell product, ship goods, or perform services. After you have completed your end of the bargain, you invoice the client. This is where the waiting usually starts, because many invoices have Net 30 or even Net 90 payment terms. This gives the client 90 days to pay your bill, but you still need to order new product and pay your employees in the meantime.
Set up an Account
Before you can submit an invoice, you must set up an account with your invoice factoring company. This isn’t a difficult process. You really don’t have to worry about the vetting process, because they’ll evaluate your clients’ ability to pay, not yours. The bigger and more financially stable your clients are, the easier it will be to factor those invoices.
Sell the Invoice
With invoice factoring, you’re essentially selling your rights to payment for the invoice in return for getting paid right away. The invoice factoring company will pay you up to 80% of the balance due on the invoice. Then you’ll get the rest when the client pays, with a small portion of that going to the financing company.
There are different ways to factor your invoice. For example, if you choose to accept liability for the payment, the invoice factoring company can come to you for the money if the client won’t pay the bill. If you choose nonrecourse financing, the financing company assumes the risk of nonpayment and charges you accordingly.
Balance Your Cash Flow
Obviously, the biggest benefit to invoice factoring in Macon, GA, is the ability to receive cash right away. However, you also save money by not having to handle your accounts receivables. Instead of turning into a bill collector, you can keep your friendly relationships with your customers and clients. The great thing is you can use invoice factoring for some or all your invoices or on an as-needed basis. It’s a flexible form of financing that doesn’t increase your company’s debt load.