Manufacturing industry has always been an integral part of the American economy. With rapid growth and competition, these industries see many challenges coming their way, where maintaining sufficient liquidity and steady cash flows are the major ones.
From its basic nature, a typical manufacturing industry experiences delays in invoice payments from its customers and sometimes this waiting period runs into months together for receivables to be settled. As a result, paying suppliers for raw materials and meeting other expenses becomes strenuous. Other irregular expenses pop-up adding more to their burden. In such situations sometimes these industries fear taking up new assignments and restrict their growth.
Invoice Factoring - The Immediate Source of Capital
Instead of waiting for months for payments, these industries can get their receivables factored once they complete the delivery. They can get up to 90% of the invoice paid immediately instead of looking forward for client to clear the payments on due date. Factoring companies take care of collection part and pay the rest amount after collection is done. When companies have cash in hand, they can immediately clear all their short-term debts and take up new assignments.
While some would instantly think of going for bank loans or overdrafts, these sources have their own limits. Industries need to have a good credit score to be eligible for bank loans and maximum amount of loan is limited by the bank and may not meet the requirements. Opting for loans adds an extra liability to balance sheet and they need to be paid back after stipulated time along with a certain amount of interest.
● While waiting time for due payments is very long, invoice factoring gets funds in quickly (days not months like banks).
● Being a flexible source, there is no limit to the amounts of invoices that can be factored.
● This allows companies to free up their capital tied up in form of accounts receivable.
● Companies get access to cash immediately without adding any debts.
● No hassles of collection and follow-ups.
Instead of settling with limited cash flows and stalling the growth, manufacturing industries with help of a reliable invoice factoring company in Pennsylvania are re-energizing themselves. This helps in easing out unsteadiness and irregularity of cash flow cycles, thus encouraging companies to move ahead with confidence. Paying long-standing debts now became easier and with timely payments to suppliers, industries can enjoy the benefits of trade discounts. Business Receivable Factoring has been supporting the manufacturing industries in America to keep their machines running.
Keywords: invoice factoring company
By: Stephen Perl
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