Using Factoring to Achieve Long-Term Business GoalsPosted by Factor Funding Co. on April 23, 2015
Unlike traditional bank loans, factoring is designed to be a short-term funding option that gives you upfront cash in exchange for your accounts receivable. As soon as your invoices are paid, you have the option of terminating your contract with the factor.
However, factoring can also be a valid way to fund your business over the course of several months or years. With factoring, you can achieve long-term goals that will help you grow your company.
Growing your business means increasing your revenue. When your current cash flow is spent on obligations like making payroll or paying your insurance, you may lack the means to explore new options for bringing in more money.
One way that you can explore such options includes hiring third-party contractors to analyze your business. When you factor your unpaid invoices, you can get the funds you need to hire these analysts and discover how you can increase your profits.
Improving Customer Service
Increasing your profits goes hand-in-hand with satisfying your customers. To satisfy your clients, you need to know how you can serve them better.
By factoring your accounts receivable, you can have cash on hand to invest in:
- Customer satisfaction surveys
- Door prizes
- Customer appreciation events
Factoring lets you achieve this long-term goal of pleasing your clients and in turn bringing more money to your company.
Increasing Website Traffic
Business owners today know that being competitive means driving traffic to both your physical office or store location, as well as to your website. If you are not skilled in creating top-notch websites, however, you need to hire designers and buy software that will increase your site's traffic.
With money you get from factoring, you can invest in the most up-to-date software and hire analysts that will redesign your website. In the long run, you will gain more customers and grow your business to new levels.
Taking on New Clients and Contracts
Another key way that helps you grow your business involves taking on new clients and welcoming new contracts. If your current cash flow leaves you unable to court new customers, you can accomplish this goal for your company by factoring your invoices.
Once you factor your invoices, you can use the money to:
- Buy online and print advertising
- Purchase inventory
- Invest in supplies for your office
- Hire new employees
- Buy or build new commercial property
These tasks show that you are ready to meet and take on new clients. You can check this long-term goal off your list by using factoring for this purpose.
Increasing Personal Wealth
As a business owner, you need to have a cache of assets and money for your personal use. If all of your income is tied up in your business, you risk losing your livelihood if your company suffers or goes out of business entirely.
When you want to build up your savings and have investments to fall back on, you can get this money through factoring. The money that you gain from selling unpaid accounts receivable can provide you with the financial stability you need during times of financial stress.
Factoring can be an ideal way to accomplish short-term business goals and give your business a quick boost of cash. However, when you are thinking long-term goals, you can finance your business for the long haul without going into debt with bank loans by selling your unpaid invoices.