5 Myths Of Invoice Factoring

Invoice factoring is a high magnitude industry term, quite well known both among the entrepreneurs and business typhoons. It is helpful not only to monitor cash flow, also helpful to cut corners when comes to a company’s expenditures. Buying invoices from companies in return for a fee of typically 2% or a small discount are the primary functions of a factoring company. Nowadays, companies opt for this method, since it generates an additional cash flow and saving costs via production or before time payment to vendors. Move down to check out the top five myths associated with invoice factoring:

1.    Factoring Is Only for Startup and Small Companies

Advancing cash on invoices, which are unpaid, is a proven strategy for startups and small organisations to financially grow at a rapid pace. Many, however, believe, invoice factoring may not the best decision for a midsize or large firm. Ironically, factoring have several perks associated it with big companies such as it inexpensive, quick, and what’s more, no tough approval procedure.  

A recent survey also suggests, some companies, which made their mark in their respective industry, factored their invoices, to begin with, then shifted to a line of credit with a bank, and at last returned t factoring. Why did they return? Unlike, traditional banking, factoring can scale up to be in line with an organisation growth.

2.    Factoring Is Quite an Expensive Venture

There is widespread misconception roaming in the industry that invoice factoring costs is on the higher side as compared to interest incurred on a loan. However, at the face of critics of factoring, invoice factoring companies usually charge less than 5 % fees of an inviolable value. In fact, since Oklahoma invoice factoring companies are in competition with banks, they usually lower than loan rates. Also, depends on a client’s invoice volume.

3.  All Factoring Agencies Are the Same

This is amongst the most myth floating with invoice factoring. Thousands of Oklahoma invoice factoring companies in the United Kingdom, however, not all offer excellent customer support, up-to-date technology, and lock clients into favorable agreements.  You need to hit upon a company that wants to build long-term relationship with their customers, and present most cut-above services. As in any other industry, some are good, while other provide shoddy factoring services.

4. Factoring Is the Last Resort for a Company Struggling to Survive in This Neck-Throat Competitive Ambience

Factoring is not only the best decision for companies facing monetary issues, also a great option for growing businesses. It is an accessible form of financing, which can cater can business’s financial needs anytime.

5. Factoring Deals Are Inflexible and Often Long

The above headline is a common myth; however, top factoring agencies lock their customers that include fixed rates, flexible terms and anytime termination facility. Termination or buy fees are typically reasonable, and more often than not term of agreement may be upto an year.

Wrapping up, after going through the above five myth buster, these minds loaming tough would have gone for a toss by now.