Most commercial and government customers pay their invoices up to 60 days after being invoiced. While this is a common business practice it can cause cash flow problems for janitorial companies that are not well capitalized. Most janitorial companies have obligations that need to be paid sooner and they just can’t afford to wait that long for customers to pay. For example, payroll must be met on a weekly or biweekly basis. Also, supplies have to be bought on a regular basis. This cash flow situation can worsen if the company is growing as it runs the risk of running out of money to cover operational expenses. Invoice factoring is the perfect cash flow solution.
Invoice factoring accelerates the revenues that are due from your slow paying commercial customers. A factoring company advances money using your invoices from credit worthy customers as collateral. Factoring provides the funds your company needs to meet ongoing obligations enabling you to focus on growing your business.
Factoring companies use your invoices as collateral. To qualify, your customers must have good credit and your company will need to meet the following requirements:
- Your invoices must be free of liens
- Your company must be free of legal and tax problems
- Your invoices must be for completed work
- Your customers need to have good commercial credit
Most factoring lines are flexible and can easily adapt to the growing needs of a janitorial company. The line grows easily with your sales, making for the ideal cash flow solution