A successful entrepreneur knows that it always pays to have plenty of options. These include options for:
- Vendors
- Funding
- Employees
By having a variety of vendors available, an entrepreneur can always make sure that they never run out of critical product. A choice of employees means that an entrepreneur can withstand the sudden departure of a key employee. An entrepreneur who has funding options can be certain the money is there when it is needed.
The problem with options is finding options that will work in any given situation. With vendors, it can be difficult to bypass a vendor that offers credit terms in lieu of a vendor that requires cash payments upfront. With funding options, an entrepreneur needs to be certain that they have access to cash in every situation and that is what invoice factoring offers.
Invoice Factoring Is Perfect For Entrepreneurs
An entrepreneur faces three main issues when it comes to finding good options to finance a business:
- A sufficient credit score.
- Collateral for secured loans.
- The need for quick cash.
Entrepreneurs are generally small business owners and that makes it difficult to get the kind of funding they need from banks. But invoice factoring does not care about an entrepreneur’s credit history or collateral. Everything is based on the invoices that the business generates. As for the need for quick cash, an established factoring account can have cash hours from submitting an approved invoice.
Factoring Is Perfect For StartUps
When entrepreneurs first get started, there is an air of excitement about their business. But after six months of operations, the start-up cash is gone and the CEO is left with a cash flow problem. It is almost impossible to get a bank to fund a startup with a limited credit history, which is why innovative entrepreneurs turn to factoring.
In that first six months of business, the entrepreneur has established a strong base of repeat customers. But the cash the entrepreneur needs to keep going is tied up in the invoices that sit on their desk. The invoices aren’t past due, but that does not make the cash show up any faster.
Companies that factor invoices will help put together a plan that will get the entrepreneur’s factoring account approved in days and get the cash flowing immediately. As long as an entrepreneur has creditworthy invoices from a set of reliable clients, then the cash flow will be there. This is true even if the company is a start-up.
Entrepreneurs Can Use Factoring To Solve Bad Credit
Another common issue for entrepreneurs is watching their new company’s credit rating drop with every unpaid invoice. The bank will supply funding for so long and then even the bank has to pull out when the credit rating drops.
But with invoice factoring, the company’s credit score is immaterial. What matters are the credit scores of each client? Factoring allows an entrepreneur to leverage the financial strength of his aging reports and use that to generate cash flow. When the bank drops out because of your company’s credit score, that is where factoring can step in and help.
Make Invoice Factoring Part Of Your Business Planning
New entrepreneurs enter into the business world with wide eyes and large ambitions. But when the realities of business start to settle in, then many of those ambitions can seem to go to the wayside. When you do the right kind of business planning for your new venture, then you won’t need to put your business ambitions to the side. Instead, those ambitions drive you to achieve success and reach your goals.
As you prepare to open your business and begin your career as an entrepreneur, it is important to explore all of your funding options. You need to discuss your financial prospects with a bank to make sure that you have all of those options covered. But you also need to have conversations with invoice factoring professionals as well. Balanced use of factoring and bank funding will allow your company to remain successful for a long time.
With invoice factoring, all you need is a steady flow of invoiced sales from customers who have acceptable credit. You do not need good credit of your own, collateral to put up as part of a loan, or a sustained credit history that would allow you to borrow funds. Factoring invoices allows you to take the money you have already earned and put it to work for you immediately. When it comes to exploring funding options for an entrepreneur’s new business, understanding factoring and establishing an invoice factoring account with a professional organization is a mandatory part of business planning.
Here’s a great motivational quote for your inspiration. Business Tip: factoring is a valuable entrepreneurial resource…
“Three components make an entrepreneur: the person, the ideas and the resources to make it happen.”
Dame Anita Roddick – founder of The Body Shop