Factoring: Keep Your Manufacturing Company CompetitivePosted by Factor Funding Co. on October 30, 2014
Surviving in today's competitive manufacturing world demands that you establish a secure financial network. You must have the money on hand to keep up with your clients' orders and also have cash set aside to invest in the newest manufacturing technology. Even so, coming up with the financial reserves you need to remain in business can be challenging, particularly if your business is new.
Rather than lapse into the pitfalls of expensive credit card and bank loan debt, you can instead use a different financial resources that has helped many other businesses succeed. A factor can help your business thrive in today's competitive market and allow you to serve your present and future clients better.
Access to Fast Cash
When it comes to securing financing for your business, you may not have time to go through a lengthy and complicated application process. A bank may require that you fill out wordy and time consuming paperwork and then sit through a tedious interview before rendering a decision about your application. With today's lending climate still tenuous at best, you may very well be turned down for a loan despite going through the exhausting process required by the bank.
However, applying for and receiving a factor loan typically is much less tedious and in fact quite efficient in comparison to applying for bank financing. You can fill out an online application and typically know within hours if you are approved or not for the money you need today. This shortened process helps your business stay competitive and avoid a debilitating slow-down while you await financing.
No New Debt or Credit Risk
With a factor, you are not taking on a new debt as much as you are using an asset already in your possession to secure financing. When you sell your invoices to a factoring lender, you avoid having to borrow against your credit or put up collateral like office equipment or a vehicle to secure the financing.
Even more, your credit does not come into play with a factor, allowing you to avoid the scrutiny and risk that often comes with applying for a bank loan. If your client that placed the order has a good history of paying its bills on time, the factoring lender may then agree to buy your invoices and extend the financing. This transaction can work out well if your credit is somewhat unstable or if your business is new and has yet to solidify its reputation in the business arena.
Fulfillment of Orders without Delay
Being able to keep up with customer demands is vital to your business' success. You may be unable to wait for your profits to catch up before you fulfill the next set of orders already placed with you. When you need money to pay for your client's orders to be manufactured, it is essential that you have the financial resources to do so.
With a factor, you can have that money in hand within days, if not hours, and continue to have your client's orders manufactured immediately. You avoid delaying this obligation and possibly angering your customers because the money you need is not accessible to you. With a factor, that money will be available to you, allowing your company to stay competitive and able to continue with its progress.
Freedom to Use Cash for Other Purposes
When you apply for a bank loan, you often must account for how you plan to use the money. If the bank does not agree with its intended use, you could be turned down for financing. You would then be without vital cash reserves that you may need to grow your company.
However, with a factor, you have the freedom to use the money from this financing as you see fit. If you do not use it to fulfill manufacturing orders, you could use it for a multitude of other purposes, including:
- Investing in new manufacturing technology
- Growing your brand with new advertising or marketing
- Expanding your customer base
- Buying supplies and inventory for your office
You can use the cash to support and grow your manufacturing company without having to account to a loan officer at a bank. You can keep your business competitive by taking it on the path that you envision rather than the one that bank dictates from you.
Securing the financial resources you need to keep your manufacturing business growing and competitive is vital in today's economic climate. Rather than use your credit cards or go into debt to a bank, you can instead rely on a factor for this purpose. A purpose can be essential in giving you the freedom to grow your business to new levels of competitiveness without causing you to go into debt or restricting the manner in which you use this financial resource.