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(913) 229-4224
Hours of Operation
Monday - Friday 9 a.m. - 5 p.m
Saturday & Sunday - Closed
Office Address
9225 Indian Creek Parkway Suite 1050
Overland Park, KS 66210
Understanding
invoice FACTORING
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Understanding Invoice Factoring
Invoice factoring is a financial arrangement that provides businesses with a practical solution to their cash flow challenges. By selling unpaid invoices to a specialized financial institution called a factor, businesses can access immediate cash. Instead of waiting for customers to pay their invoices, companies receive a quick cash infusion, typically 85% to 90% of the invoice’s total value, within a day or two of submitting the invoices.
How Invoice Factoring Works
This rapid injection of funds is crucial for covering operational expenses, expanding the business, or seizing new opportunities without taking on additional debt. One of the main advantages of invoice factoring is that it shifts the responsibility of collecting payments from the business to the factor. The factor assesses the creditworthiness of the business’s customers and assumes the risk of non-payment.
Once the customers pay the invoices, the factor deducts its fees and the initial advance, then transfers the remaining balance to the business. Invoice factoring is especially beneficial for businesses with slow-paying customers or those experiencing seasonal fluctuations in cash flow, offering a flexible financing option to help them thrive and grow.
Benefits of Invoice Factoring
- Immediate Cash Flow: Receive funds quickly to cover expenses or invest in growth.
- No Additional Debt: Access cash without increasing your debt load.
- Risk Management: The factor assumes the risk of non-payment.
- Improved Cash Flow Management: Ideal for businesses with slow-paying customers or seasonal cash flow variations.
Why Choose Invoice Factoring?
Invoice factoring helps businesses maintain steady cash flow, ensuring they can meet financial obligations and capitalize on growth opportunities. It’s a flexible and efficient solution for businesses seeking to improve their financial stability and achieve long-term success.
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Benefits of Partnering with Plex Capital for Your Business Funding
Immediate Access to Capital
Rapid funding solutions, ensuring you have the necessary capital to meet payroll commitments without delay.
Free Application
Experience a streamlined process, ensuring ease of access to financial solutions without an initial expense.
Flexible Funding Amounts
Adaptable financing with no strict minimums, ideal for smaller businesses or modest capital needs.
Enhanced Growth Opportunities
Seize growth opportunities more readily, whether it's investing in new projects, or hiring additional staff.
Collateral-Free Financing
Unlike many conventional loans that require collateral, Plex Capital does not require you to put up your business assets, reducing risk and providing peace of mind.
No Credit Required
Plex Capital offers funding solutions without the need for a high credit score, making it accessible for businesses that may have difficulty securing traditional financing.
How Did Invoice Factoring Become So Useful Today?
Understanding the Growing Importance of Invoice Factoring
Invoice factoring has become increasingly useful in today’s business landscape due to several key factors:
Cash Flow Challenges: In a competitive market, businesses often face cash flow gaps due to delayed customer payments. Invoice factoring provides a reliable solution by offering immediate access to a significant portion of the invoice amount.
Simplified Access to Financing: Traditional bank loans can be time-consuming and challenging to secure, especially for small and medium-sized businesses. Invoice factoring offers a quicker and more accessible source of financing without extensive credit checks or collateral requirements.
No New Debt: Invoice factoring is not a loan; it’s a sale of accounts receivable. This allows businesses to access working capital without accumulating debt, maintaining a healthy balance sheet.
Boosting Growth: Factoring enables businesses to invest in growth opportunities, such as larger contracts, expanding operations, or launching new products. Improved cash flow facilitates business development.
Flexible Funding: Factoring grows with your business. As more invoices are generated, more funding becomes available, providing scalability to meet changing financial needs.
Risk Management: Factoring companies often assume the risk of customer non-payment, offering businesses security against bad debts.
Outsourcing Collections: Factoring companies handle collections, saving businesses time and resources, allowing them to focus on core operations.
Diverse Business Applications: Invoice factoring is used across various industries, including manufacturing, construction, staffing, healthcare, and more, to address cash flow challenges.
Operational Efficiency: Improved cash flow enhances a business’s ability to meet financial obligations, such as payroll, inventory purchases, and operational costs, leading to smoother and more efficient business operations.
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Examples of Invoice Factoring Usages
Business
XYZ Manufacturing, a mid-sized manufacturing company that specializes in custom metal fabrication for various industries.
Scenario
XYZ Manufacturing was experiencing a common challenge in the manufacturing industry: cash flow fluctuations due to extended payment terms with their customers. Many of their clients, including large construction companies and industrial suppliers, paid their invoices on a net-60 or net-90 basis.
This delay in receiving payments was straining XYZ Manufacturing’s cash flow and hindering their ability to purchase raw materials, pay employees, and fulfill new orders promptly. They knew that missing out on potential contracts or delaying production due to financial constraints was detrimental to their growth and reputation.
In this scenario, XYZ Manufacturing decided to explore invoice factoring as a solution to their cash flow challenges.
Results
As a result, XYZ Manufacturing not only improved their cash flow and financial stability but also positioned themselves as a reliable and competitive player in their industry. Invoice factoring became an invaluable financial tool that helped them navigate the challenges of extended payment terms and seize growth opportunities with confidence.
Benefits
Immediate Cash Infusion
Upon delivering completed orders and generating invoices, XYZ Manufacturing sold their invoices to the factoring company. This allowed them to receive a significant portion of the invoice value upfront, typically within 24 hours.
Working Capital Flexibility
The cash received from factoring gave XYZ Manufacturing the flexibility to manage their day-to-day operations with ease. They could purchase materials, pay employees, and meet production demands without delay.
Growth Opportunities
With improved cash flow, XYZ Manufacturing was able to capitalize on growth opportunities. They could confidently take on larger projects and secure contracts with bigger clients.
Steady Business Operations
The factoring company handled collections on the invoices, relieving XYZ Manufacturing of the administrative burden and ensuring timely payments from their customers.
No New Debt
Unlike traditional loans, invoice factoring didn’t create debt for XYZ Manufacturing. They simply leveraged their outstanding accounts receivable to access the working capital they needed.
Business
ABC Staffing, a successful staffing agency specializing in providing temporary and permanent personnel to a wide range of industries.
Scenario
ABC Staffing had built a strong reputation in the staffing industry, serving businesses across various sectors, from healthcare to IT. They had a steady flow of clients and a reliable roster of candidates. However, they encountered a common challenge in the staffing industry: inconsistent cash flow due to the timing of client payments.
The staffing agency had to cover salaries and operational costs promptly, but many of their clients operated on net-30 or even net-45 payment terms. This discrepancy between paying employees and waiting for client payments caused cash flow gaps and made it challenging for ABC Staffing to operate smoothly.
In response to these cash flow challenges, ABC Staffing decided to explore invoice factoring as a solution.
Results
By leveraging invoice factoring, ABC Staffing addressed their cash flow challenges without taking on additional debt. They not only improved their financial stability but also positioned themselves for sustained growth and a competitive edge in the staffing industry.
Benefits
Immediate Cash Injection
After successfully placing candidates and generating invoices for their clients, ABC Staffing sold these invoices to the factoring company. In return, they received an immediate advance, usually around 90% of the invoice value.
Timely Salary Payments
The cash received through factoring allowed ABC Staffing to pay their employees on time, maintaining high morale and retention among their candidates.
Growth and Expansion
With improved cash flow, ABC Staffing had the financial freedom to expand their operations. They could take on larger contracts and serve more clients.
Client Relationships
The factoring company handled the collection process on behalf of ABC Staffing. This ensured that their client relationships remained strong, as clients continued to receive reliable service and timely invoices.
Flexible Funding
Factoring provided a flexible funding solution that grew alongside ABC Staffing’s business. The more invoices they generated, the more cash they could access through factoring.
Business
JKL Construction, a mid-sized construction company specializing in residential and commercial projects.
Scenario
KL Construction was thriving in a competitive construction industry, winning contracts for various projects, from building new homes to renovating commercial properties. However, they faced a common issue in the construction sector: extended payment terms.
Most of their clients, including property developers and businesses, operated on net-60 or net-90 payment schedules.
As a result, JKL Construction often had to wait months to receive payments for completed projects. This cash flow gap strained their ability to pay subcontractors, purchase materials, and cover operational costs, leading to delays and occasional missed opportunities.
In response to these cash flow challenges, JKL Construction turned to invoice factoring as a solution.
Results
By utilizing invoice factoring, JKL Construction addressed cash flow challenges without incurring debt. It not only improved their financial stability but also positioned them as a reliable and competitive player in the construction industry, ultimately fostering growth and a strong reputation.
Benefits
Immediate Cash Relief
Upon delivering completed orders and generating invoices, XYZ Manufacturing sold their invoices to the factoring company. This allowed them to receive a significant portion of the invoice value upfront, typically within 24 hours.
Working Capital Flexibility
The cash received from factoring gave XYZ Manufacturing the flexibility to manage their day-to-day operations with ease. They could purchase materials, pay employees, and meet production demands without delay.
Growth Opportunities
With improved cash flow, XYZ Manufacturing was able to capitalize on growth opportunities. They could confidently take on larger projects and secure contracts with bigger clients.
Steady Business Operations
The factoring company handled collections on the invoices, relieving XYZ Manufacturing of the administrative burden and ensuring timely payments from their customers.
No New Debt
Unlike traditional loans, invoice factoring didn’t create debt for XYZ Manufacturing. They simply leveraged their outstanding accounts receivable to access the working capital they needed.
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Contact Info
Phone Number
Hours of Operation
Monday - Thursday 9am - 5pm
Friday - 9am - 2pm
Saturday & Sunday - Closed
Office Address
9225 Indian Creek Parkway Suite 1050
Overland Park, KS 66210
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