How Factoring Benefits Service Provider Companies

Most service provider companies share the same common problem:  payroll deadlines needing to be met before you can collect on charge sales. Service provider companies usually sell on up to 60 day net terms.  The cost of financing your clients by offering credit terms is a part of the business.  Most factoring lines are flexible and can easily adapt to the growing needs of a service provider company. The line grows easily with your sales, making for the ideal cash flow solution.

Service companies extend payment terms to their customers. Your receivables may be the largest asset your company can offer for additional working capital. By setting up invoice factoring line of credit, your company can utilize its own asset for immediate working capital and create additional cash flow. Additionally, you can increase your credit terms to existing customers and solicit larger customers without impairing your cash flow. Furthermore, you can take advantage of early payment discounts offered by your vendors and expand your employee base to take on more service opportunities so you increase your bottom line by generating more sales.

Factoring companies use your invoices as collateral.  To qualify, your customers must have good commercial credit and your company will need to meet the following requirements:

  1. Your invoices must be free of liens
  2. Your company must be free of legal and tax problems
  3. Your invoices must be for completed work
  4. Your customers need to have good commercial credit