Solve Your Security Guard Staffing NeedsPosted by Factor Funding Co. on April 9, 2015
You rely on your cash flow to keep your security guard business up and running each day. When your clients do not pay you upfront, as often is the case with security guard services, you risk running out of money and not having the staff on hand that you need to take care of other clients.
Instead of taking out a bank loan or selling off your personal assets, you can raise the funds you need and stabilize your cash flow and hire workers with factoring. Factoring your invoices helps you grow and maintain your security guard company with these notable advantages.
Easier Approval Criteria
Banks continue to impose difficult lending criteria on applicants. You must have high credit scores and perhaps even collateral that you can put up against the loan balance.
If your business is still new and growing or you lack a high enough credit score, you could be turned down for a bank loan. However, factoring can be easier to be approved for because:
- The factor looks at your invoice clients' credit instead of yours
- You do not need co-signer if you lack good credit
- The money extended to you is based on the value of your accounts receivable
As long as you have accounts receivables, you can use them as a source of financing to hire enough staff for your business.
When you apply for a bank loan, you often must wait days, if not a week or longer to be turned down or approved. Similarly, if you allow your clients a month or two to pay their invoices, you may be unable to wait to hire more workers until your customers remit payment.
Rather than wait the 30 to 60 days to be paid, you can sell those accounts receivable to a factor and get money for your cash flow faster. A factor can verify your invoices and advance you up to 80 percent of their value in a few days' time. After your clients remit payment to the factor for their accounts receivable, you will receive the remaining 20 percent, minus the factor's fee.
No New Debt
Factoring is not a loan. Instead, it is a transaction that allows you to sell your outstanding accounts receivable at a discount.
Because you may be growing your business and lack the revenue right now to take on a bank loan, you benefit because:
- You get money upfront to hire staff for your company
- You have no monthly payment
- Once the invoices are paid in full, you can close your factoring account or sell new invoices for continued financing
Factoring provides funding that reflects the amount of money that you take in from your clients. You are not posed with paying back a loan that may become too expensive for your company's finances.
Running a security business demands that you focus on hiring and training workers, as well as servicing your clients. You may lack the time to collect on outstanding accounts and not have the funds to hire more employees for this purpose.
When you factor your invoices, however, you streamline your accounts' collections. The factor takes over collecting on these accounts, letting you return to running your company. Your clients are notified to send payments to the factor rather than you.
Funding That Grows with Your Business
As your company grows, you also may need to increase your budget for hiring. Factoring can provide this extra financing that you need to keep your company adequately staffed.
When you take on more clients and create more accounts receivable, you likewise increase the number of invoices that you can sell to a factor. This in turn can help you secure more funding than what might be possible through bank lending. The increased cash flow lets you hire enough staff to service your company's future projects.
Keeping enough staff on hand for your security guard company can be a challenge if you are not paid upfront for your services. Rather than risk your cash flow and ability to hire on bank loans, you can get the money you need with factoring.