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When it comes to quickly increase business capital, Invoice Finance , also known as Invoice Factoring , can provide an excellent alternative to bank loans. It is all too easy to get bogged down in financial jargon, but the difference between the two is quite obvious.
benefit factors vs bank loans
1. Factoring is not financing, the company is not really a loan as it comes from the tap. An invoice finance companies actually buy the company accounts, which are in fact owned by the Bank.
2. Often turnaround bank loans can be long, as banks need to perform acceptance and underwriting as part of the loan process. In the current climate response time may take even longer. With factoring process is much quicker.
3. Factoring can offer immediate cash flow when the relationship with the provider is established. The set up process can take as little as a week, often with money in your bank account within 24 hours of the receipt of business invoices. As your business grows, so does the available funding. You do not even need to negotiate new terms.
4. Banks generally need to see trade figures for the company in the last two or more years. It may also require additional financial security by collateral. Factoring is not dependent on the company’s credit rating book liabilities are generally only assets needed to secure funding.
5. Factoring is useful to less established companies, especially in the economic climate today. As long as the customers business is creditworthy, there should not be any problems. Invoice finance is a good choice for a young company that is growing faster than the balance sheet. The Bank tends to look at the historical financial information, and a factoring company is interested in what you are doing today and tomorrow.
6. Invoice Factoring is a unique way to improve cash flow as finance provider may close day to day contact with clients and their customers. Because there is so much part of the finance acquisition of the factoring company must know its customers than traditional lending.
7. factors, the company is using the assets of the company and not the personal assets to meet funding needs requirements.
To summarize, the impact of bank loan is very different strengths invoice factoring process enterprise. A loan put debt on a company’s balance sheet, while the factors increasing cash flow quickly and put money in the bank. Loans are largely dependent on the financial strength of the company, but it is reliant on the track record of customer client; a real bonus for new businesses without established track records.
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