Combining Equipment Financing and Invoice Factoring
In order for your business to stay successful, it is important to stop and consider the various financing solutions available to you. When the time comes to invest in new equipment, for example, you may discover that you don’t have the available capital to buy the machinery outright. When this happens, a service like equipment financing can prove invaluable. Of course, you may also want to boost your cash flow to cover the financing costs. This is where a service like an invoice factoring comes in. Take a look at these tips to learn more about getting started.
Invoice Factoring Explained
There are times when your available capital will dry up due to circumstances beyond your immediate control. When clients are not paying for services you provided, it can prevent you from having access to the cash you require. Factoring is a service where you sell your qualifying unpaid invoices to a company that specializes in accounts receivable financing. The company provides you with a portion of the invoice value in cash, then collects the debt from your clients and pays you the difference. You pay a fee for the service and you are granted the cash you require.
One of the biggest advantages that you can expect from factoring your invoices is the ability to receive the cash you need without having to take out a loan. Financial solutions like loans can be useful in some situations, but it can put you in more debt than you would prefer at a time when your finances are already stretched thin. Factoring provides you with an advance on the money you are owed. This means you do not need to worry about taking on additional debt and you can still get the funds you need for equipment financing.
Using the Funds for Equipment
After factoring provides you with your advance, you can use the money as a down payment on equipment options. Instead of buying the equipment outright and depleting your cash with a one-time payment, you can spread payments out over a period of time and use your available capital in a wise way. In addition, financing allows you the ability to select more advanced equipment models you would not have been able to afford otherwise.
When it comes to investing in machinery for the future of your business, there are several options to consider. By using a service like factoring to pay for your equipment financing, you will be able to get more out of your experience and do what’s best for your business.