Working Capital For Your Business When You Need It Most
Many businesses are facing challenges. Ongoing effects of pandemic lockdowns, inflation, and supply chain issues are all making it difficult to maintain steady cash flow. Invoice factoring is a type of financial service that can be helpful, even for businesses that may not qualify for traditional funding like a bank loan or commercial loan. Let’s look at how factoring works, its main benefits, and how a business can apply for it.
You don’t have to wait on slow paying customers with invoice factoring. Check out the easy steps to get paid for your invoices in as little as 24 hours.
Invoice factoring is a reliable alternative to more traditional means of financing for businesses, such as small business loans, commercial loans and small business lines of credit, among others.
Riviera Finance works with a variety of companies in the US and Canada to help them maintain cash flow and meet weekly financial demands.
Our process is built around immediate response to client needs, and the best cash turn around in the industry.
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Any business that invoices its business customers then waits to be paid can apply for invoice factoring. It’s a type of financial service in which the factoring company purchases accounts receivable, allowing the client to receive immediate cash. Factoring helps businesses improve cash flow, providing working capital now, when it is needed to cover operating expenses and allows the company to take on more business. Invoice factoring shields them from the lag time involved in invoicing then waiting to be paid, plus rids businesses of the uncertainty from customers who may pay late.
In an ideal world, when businesses send out invoices, they are paid promptly. In the real B2B world, however, customers often require extended payment terms such as 30 – 60 days. When your customers are themselves having cash flow problems, it can delay payments. When invoices are factored, you are assured of receiving payment on a consistent schedule.
If your business needs working capital for growth or expenses, invoice factoring is a great solution. Below are some of the top advantages to invoice factoring for you business.
A business without a long history, collateral, or perfect credit often finds it hard to qualify for traditional loans. Invoice factoring is easier for many businesses to obtain. The factoring company will mostly look at the credit-worthiness of your customers who will be paying them.
When you take out a loan, you incur debt. You have to pay off the interest as well as the principal. When you factor invoices, you aren’t taking out a loan so you aren’t taking on any debt. The fees are taken out of each transaction, so there’s no accumulation of interest or any other costs.
When you are responsible for getting customers to pay invoices, you have to expend a great deal of time and effort on collections. When you factor invoices, the factoring company handles many of these responsibilities. Since the customers are no longer paying you directly, it saves you the hassle of having to run after late-paying customers.
Other business financing options often come with restrictions on how the money can be used. A loan, for example, may be limited to uses such as buying supplies or equipment. Factoring, on the other hand, allows you to use the money for any business purpose. It’s basically the same as if your customer had paid you directly except that you can count on getting paid on a regular schedule.
Every type of financing comes with certain fees. In the case of factoring, you aren’t paying interest, as with a loan. However, the factoring company does charge a fee with every transaction. The amount depends on several things:
Certain industries may command higher or lower factoring fees.
Factoring often comes with reserves that are held by the factoring company until the customer pays an invoice. Higher reserves result in lower factoring fees.
When the fee is lower, you may be required to factor all of your invoices, which not all businesses prefer to do.
When you commit to factoring for a longer period of time, fees will be lower.
With recourse factoring, the client (of the factoring company) is ultimately responsible for any unpaid invoices. Non-Recourse Factoring means that the factoring company assumes the credit risk on any invoices they factor. To cover the additional risk, they will charge you higher fees.
As with any business financing options, there are pros and cons to factoring.
Pros
Cons
Founded in 1969, Riviera Finance is nationally recognized as a leader in business financing and a top invoice factoring company. Riviera Finance provides full-service, non-recourse invoice factoring to growing companies.
We are the experts in invoice factoring and accounts receivable management. Riviera Finance maintains offices throughout North America to provide face-to-face service and expert financial solutions to small and medium-sized businesses. Currently serving more than 1,400 clients, Riviera holds an excellent credit rating, has shown consistent, positive earnings and maintains a diversified capital base.
We have more than 25 invoice factoring company offices located throughout the US and Canada to handle all of your invoice factoring needs.
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