Why a small business should opt for invoice factoring? (PART 2)
In the previous article, we had taken you through the five reasons of why a small business should opt for invoice factoring. However, we believe that there are more reasons that make accounts receivable financing a good choice for businesses facing cash crunch or businesses that have failed to raise funds through a bank loan. In the second part of why small business should opt for invoice factoring, we have tried to give you a full and final picture. Let’s read:
· Creation of new product line: With the available cash generated through invoice factoring, a company has enough possibilities and resources to develop a new product line. The best way of increasing the possibilities of your success is innovation. The more you innovate, the more customers will notice you. Increasing your product or service offerings helps your business to grow and stabilize itself foothold in the market. However, you must understand that creating a new product line includes massive amount of expenditure thus you must identify the market gap before making such a huge investment.
· Being able to buy in larger quantities: The cash in hand can be used to buy raw materials or supplies in larger quantities thus first, increasing your production capacity and second, allowing you to ask for a discount from your supplier. Buying huge quantity of goods means you save more on the total raw material cost. If you are buying in massive quantities then you can directly deal with the manufacturing company, therefore, eliminating middlemen and decreasing your procurement cost.
· Fund availability to meet special opportunities, emergencies and seasonal peaks: A company needs cash at all points of time. Whether it is an organizational emergency, a bigger order or a new client with novice requirements, a company must have available funds so that its operations are always in motion or it cab swiftly meet emergencies at work. With invoice factoring, you can have constant cash supply thus have lesser worries of ceasing business operations due to shortage of cash.
· Better position in the marketplace: Invoice factoring can help you cement a more competitive position in the market. It builds a good reputation of your company and increases your goodwill. With your business meeting all its requirements (whether human resource or manufacturing requirements) on time and delivering your orders as per the deadlines, your goodwill among the traders, vendors, and clients is set to grow by leaps and bounds.
At the end, invoice factoring helps you expand your business without losing your equity or control over the management. Invoice factoring is a win-win situation for a small business.
