5 Strategies to Reduce Invoice Factoring Costs
Cash-strapped businesses can use accounts receivable to receive cash via invoice factoring. Businesses using this strategy will consider the cost-benefit analysis to determine if invoice factoring is a worthwhile solution. Here are five strategies that can help a business offset the cost of factoring while improving cash flow.
Early Payment Discounts
Use the cash to realize discounts in paying your invoices early. If your service providers and suppliers extend discounts for fast payment, you can reduce your cost by using invoice factoring cash to get a discount on expenses.
Suppliers tend to sweeten larger deals with reduced per-unit pricing for bulk purchases. Be sure that the bulk resources purchased are needed and will be utilized rather than sit in the warehouse creating storage costs or go unused.
Submit Fast Paying Customers
Targeting reliable customers that pay promptly for invoice factoring is an easy way to reduce risk and cost.
Delay Invoice Submission
One way to make the time = money strategy work for you is to allow invoices to age for 15 days before invoice factoring submission. Customers that pay within 45 days are now 30-day customers when the invoice ages for 15 days before submission.
Immediate increases in cash can help businesses grow when they use that money to fill additional orders. This can increase profitability if overhead expenses are fixed and do not increase with the cost of goods sold.
Have Questions? Get Answers.
You might be cash-strapped and interested yet the questions are mounting if invoice factoring is right for your business. Please read our Frequently Asked Questions.
Is Invoice Factoring Right For My Business?
Invoice factoring is an excellent strategy for many businesses across a variety of sectors. Collecting invoice payments is not only a labor-intensive process but it can strangle a business of the cash it needs now. If you want to dedicate fewer resources toward debt collection and access cash on those invoices immediately, invoice factoring can help your business.