Understanding Invoice Factoring
Invoice factoring is a powerful financial solution where businesses sell their accounts receivables to a factor—like EBF—for additional capital. Typically, you receive 80% of the invoice value upfront, with the rest (minus fees) paid after your customers settle. Unlike loans, it’s a sales agreement, meaning no debt incurred with invoice factoring.
“At EBF, we stand out in the alternative finance space,” says Fred Paatz. “We let clients opt to handle collections themselves, ensuring maintaining customer relationships with factoring without third-party disruption. We assess your customers’ payment history to keep things smooth.”
The Benefits of Invoice Factoring:
- Quick access to funds with factoring: Get cash in as little as 4 days to cover urgent needs.
- Outsourced collections in factoring: EBF takes on payment chasing (if you choose), easing administrative burdens.
- Flexible funding through invoice factoring: Funding grows with your sales volume—perfect for dynamic small businesses.
- Expert Support: “Our team offers consulting to ensure your success,” Paatz adds, highlighting EBF’s value.
“EBF’s clients receive the added benefit of having a diligent, experienced team on hand to assist where required. We offer consulting and sound advice to our customers as a standard. “This helps us stand out from the competition. It also supports the future success of the businesses we work with,” adds Paatz.
Considerations when employing Invoice Factoring:
- Customer perception in invoice factoring: Third-party collections might raise eyebrows, but EBF’s flexible approach avoids this.
- Cost of invoice factoring: Fees vary, but a well-structured deal from EBF keeps it cost-effective. Research your factor to ensure fair terms.
Asset-based Lending: Unleashing Tangible Capital
Asset-based lending for businesses unlocks capital by borrowing against the value of your assets—think inventory, equipment, or real estate. The loan amount depends on the collateral evaluation for asset-based lending, offering a secure funding option.
“Asset-based lending taps into the real value of your business, not just perceptions like traditional loans,” Paatz explains. This versatile choice exists for companies with substantial assets.
The Benefits of Asset-Based Lending:
Considerations for Asset-Based Lending:
- Collateral evaluation for asset-based lending: Smaller asset pools may limit funding for some small businesses.
- Risk of asset loss in lending: Defaulting could mean losing pledged assets, so plan repayments carefully.
Choosing Between Invoice Factoring and Asset-based Lending
When to Choose Invoice Factoring
Opt for invoice factoring for small businesses if your priority is cash flow solutions for companies without adding debt. It’s ideal for businesses with steady sales but slow-paying clients—like a retailer waiting on 60-day terms.
Quick access to funds with factoring bridges short-term gaps, and flexible funding through invoice factoring scales as your invoices grow. If preserving relationships matters, EBF’s option to manage your own collections ensures maintaining customer relationships with factoring. Best for: service providers, wholesalers, or startups needing working capital fast.
When to Choose Asset-based Lending
Choose asset-based lending for businesses if you need higher funding limits with asset-based lending for big moves—like buying equipment or expanding facilities. It suits companies with valuable assets (e.g., manufacturers with machinery) and offers lower interest rates in asset-based lending for cost savings.
Asset utilization in lending lets you keep operating while borrowing. Best for: established firms with tangible assets seeking long-term growth.
Blending Both with EBF
Why pick just one? EBF’s tailored financial solutions from EBF combine unlocking working capital with factoring and unlocking tangible capital with lending. For example, factor invoices for daily expenses while using assets for a major upgrade. “We assess your whole situation to craft the right mix,” Paatz says. This flexibility maximizes capital access for small businesses.
Invoice factoring and asset-based lending are vital alternative finance solutions simplified for small businesses. Unlocking working capital with factoring delivers quick access to funds for cash flow solutions for companies, while unlocking tangible capital with lending offers higher funding limits for growth. At Express Business Funding, we tailor these options to your needs—whether it’s flexible funding through invoice factoring or lower interest rates in asset-based lending. No matter your asset base or sales volume, our financial solutions ensure success without compromising relationships or stability. Ready to explore business finance that works for you? EBF is here to help.
Need cash flow solutions for companies? Discover invoice factoring for small businesses or asset-based lending for businesses with EBF. Contact us for tailored financial solutions that drive growth.
