Cash flow is critical for growing your business. Having access to a line of credit is a dream of many business owners who are frustrated with not having enough cash on hand. However, unless your business is well established, with great credit, you may not have access to a line of credit. Even more importantly, however, a line of credit may not be the right answer for your cash flow needs. Invoice factoring is a viable alternative to getting a line of credit, especially for smaller companies. In many cases, factoring is the better choice. Why Is Factoring Better Than a Line of Credit? Invoice factoring is easier to obtain and expand. Have you gone to the bank and applied for a line of credit? Many small business owners have. If you have great credit and an established business, the bank may offer you a line of credit. The problem is that many small businesses are not that well established and may not have the best credit on the planet. Those businesses can struggle to get a line of credit from any lender. …show more content…
The only way a lender is going to agree to a larger line of credit is if you have even better credit than you did when you got the first one. And it can take weeks to get the approvals. Invoice factoring is much easier to set-up and expand than a line of credit. You can get approval in a few business days, even if you are not well established or have the best credit. Once you get approval and submit your open invoices, you can get up to 90 percent of the value of those invoices within a day or two. As your business grows, your invoice count and totals due will also grow. That makes it possible to expand your available cash flow by submitting more of those invoices to the factoring