Working Capital

Invoice Factoring = Working Capital

Working Capital is essential for every company, to meet its continuous operational needs. The availability of working capital influences your company's ability to meet its short-term debt obligations, as well as to remain financially viable. If your current assets do not exceed your current liabilities, you run the risk of being unable to pay short term creditors in a timely fashion.

Many companies suffer from negative cash flow due to the time frame in which their customers pay their invoices. Some companies open a bank line of credit to gap the difference from the time they invoice their customers, to the time they receive a payment. The problem with this is once a business starts tapping into a line of credit, it is often very difficult for that business to pay off its line of credit. When this happens, the short term demand for working capital is solved, but now the business has assumed an additional debt that must be paid off or paid down on a monthly basis.

Should you Choose Account Receivable Financing to access Immediate Cash?

Working capital gives businesses the freedom to grow, hire new employees, order new machinery and meet payroll demands. One of the biggest reasons why companies use the services of a commercial factoring company is to offer longer credit terms to their customers. Many businesses cannot offer long credit terms due to cash-flow issues, this can be the difference in obtaining a new account or losing it to a competitor.  When you factor your invoices, you get paid within 24 hours of the verification of that invoice, whether or not the customer pays in 30 days or 90 days.