Keeping positive cash flow when a client’s payment timeline is longer than yours can put real pressure on any small business.
Invoice financing companies advance you cash using your business’s outstanding invoices as collateral—giving you an excellent way to put more money into your business right away.
With invoice financing (also known as accounts receivable financing), you could get a fast advance—in as little as one day—between 50% to 90% of the total invoice amount. Often times, factoring companies offer this financing with varying structures. Typically, the balance of the 10% to 50% reserve amount is paid to you when the customer pays the invoice, minus the fees.
Fees vary from different companies, but generally, the fee is 3% plus an additional weekly fee for each week until the invoice is paid. For the right situation, it can be a perfect solution to account for late-paying customers or cash flow slowdown. Here’s a breakdown of three different options from companies who can turn your unpaid invoices into cash.
BlueVine
BlueVine offers small businesses an advance on their invoices, enabling them to get paid on the first day. The system is a fully-automated online, paper-free solution with simple and transparent terms.
BlueVine advances based on your credit line. You receive 85% of the invoice within 24 hours, and the balance when your customer pays, minus the standard fees of 1% per week. You will earn discounts on standard rates and save by paying advances back before their due date as you build a history.
BlueVine will have you maintain control of your customer relationships and manage all communications for collecting on invoices.
To get started, sign up for a free account, connect it to your invoicing or accounting software, and choose the invoices you want paid. Your first advance can be approved in as little as one day, and subsequent advances within minutes.
Dealstruck
Dealstruck’s Asset-Based Line of Credit (ABL) enables you to receive an advance line of credit, usually 80% to 85% based on your aging accounts receivables. As your customers pay their invoices, payment is sent to a bank account maintained in your name but managed by Dealstruck.
These payments are used to balance out the line of credit on a weekly basis, establishing a revolving line of credit that enables the money that’s been repaid to be borrowed again right away.
The Dealstruck ABL is often far less costly than other factoring and has fewer restrictions on what amount they will advance to you. This is because Dealstruck underwrites your credit line based on your overall business performance and total receivables, instead of your customer’s ability to pay.
Fundbox
The big difference between Fundbox and other factoring companies is that it offers funding on the full amount of an invoice. You will repay principal, transaction fees and advance fees in 12 equal weekly payments. Or you could pay off the principal early to waive any remaining fees.
Fundbox is very much like a credit line based on your invoices. When you need cash, you can clear an invoice. When you don’t need it anymore, you can repay early without any costs.
Although each invoice is underwritten separately, Fundbox focuses on active invoices and rarely funds past-due invoices. In addition, the company stays out of your collections process, letting you manage and oversee your critical customer relationships the way you see fit.
Gracefully Sidestep a Slowdown
Don’t let a delayed payment or cash gap put your company into a capital slowdown or meltdown. This is a common problem with small business owners that can be easily resolved with the right type of financing that will bridge the gap and keep your finances running smoothly. If you have consistently late-paying customers, consider invoice financing to turn your invoices into cash today.
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