While 2020 marked an unprecedented moment in history from almost every point of view, 2021 will come with its own set of challenges. This is how Factoring of Accounts Receivable can help small business owners navigate this new landscape.
What Is Factoring of Accounts Receivable?
Factoring your invoices means selling them to a company (called a Factor) that pays you upfront and takes care of the collection process in exchange for a small fee. This way you get the cash immediately, without having to wait 30 to 90 days for your clients to pay you.
There are two types of Factoring: recourse and non-recourse Factoring. With recourse Factoring, you have to buy back any invoices that the Factor is unable to collect. By contrast, with non-recourse Factoring, the Factor assumes the risk of any non-payment.
At ACS Factors we are a non-recourse Factoring company, which means that if a customer cannot pay, the loss is on us, not on your business! To learn more about how non-recourse factoring can help your organization, check out this previous post.
Protect Your Cash Flow
A solid cash flow can make or break your business. This is a universally accepted truth that is especially valid during times of uncertainty.
And while it appears that 2021 will probably be less rocky than 2020 for small businesses, chances are that recovery will be progressive, so you’ll still have to keep a vigilant eye on your cash flow to ensure that your margins make sense.
Factoring is one of your best allies when it comes to maintaining a positive cash flow. Should you face a cash crunch, you can always resort to Factoring to quickly unlock funds tied up in your outstanding invoices.
Face Unexpected Expenses
As mentioned earlier, the economy will probably recover gradually and many unexpected expenses may arise in the process. You may have to make adjustments to your facilities, purchase protective gear to reopen your business, or acquire more inventory.
The truth is that no one has a clear idea of what recovery will look like or what it will entail. What’s for sure is that having an ace up your sleeve is always a smart idea. Factoring is such a quick and versatile financing tool that you can use it to overcome almost any obstacle.
Get Funds to Ramp Up Business
Starting a business, or jumpstarting an existing business after a slump, can take considerable effort and funds.
In order to ramp up business in 2021, small business owners will have to adopt strategies that range from redesigning their website to commissioning signage or even embarking on a total rebranding of their image.
In any case, an investment will be necessary, and with funds in short supply, Factoring holds the key to help you rev up your business and have it firing on all cylinders again.
ACS Factors: Advancing the Capital You Need to Move Your Business Forward
At ACS Factors, we are here to help you turn your invoices into immediate cash. We are located in Upland, California, and have many clients in the distribution and logistics corridor which includes Ontario, Riverside, Fontana, Jurupa Valley, and Moreno Valley.