The United States has a significant number of small businesses. Recent figures indicate that there are almost 28 million small businesses currently operating within this country. At some point, a certain percentage of these small businesses may experience a temporary cash-flow issue. In order to address this situation, a business may choose to utilize invoice factoring services to cover their outstanding invoices.
A Basic Definition of Invoice Factoring
Basically, invoice factoring is a form of accounts receivable financing. When a business has outstanding invoices that will be paid within 90 days, an invoice factoring company would provide the cash necessary to cover a percentage of these. A business’ credit does make a difference in whether or not these loans will be approved and for what amount.
How Invoice Factoring Services Work
When small businesses experience invoice payment gaps, a factoring company can assist them with immediate upfront payments. In general, this amount might be between 70% to 90% of the total invoice amount, according to the Wall Street Journal. Businesses will also be charged a factoring, or transaction fee, for this service.
A Brief Overview of Bankruptcies
Many businesses within the United States face bankruptcy. Unfortunately, the number of business that have needed to file for bankruptcy has increased within recent years. During the first quarter of 2016, for example, 24,797 businesses filed for bankruptcy. In the second quarter, this number increased to 25,227 companies.
Learn More About Business Factoring Services
If your business is currently experiencing cash-flow issues due to outstanding invoices, utilizing a factoring service may prove to be a viable option. Since you want to do your best to ensure that your business continues to operate effectively, it makes sense to learn more about this service.
There are a variety of business factoring services that may be of benefit to your small business. If you conduct business outside the United States, for instance, there is also a service for international factoring. Once you speak with a representative, you will be able to learn more about the service for international factoring as well as freight capital factoring and other valuable services.