Using factoring to cover operating expenses is the smart move for small businesses looking to meet the challenges of the “new normal.” Keep reading to discover why.
Using Factoring to Pay Operating Expenses
Flexibility is one of the reasons why factoring of accounts receivable is so convenient.
When you factor your receivables, you get cash fast which you can use for a variety of purposes, from purchasing materials to hiring more staff.
Of course, you can also use factoring to pay operating expenses such as insurance, maintenance, rent, payroll, and utilities.
As we’ll see in the next section, this specific use of factoring has the potential to become a lifeline for companies looking to keep moving forward in an economic landscape where the effects of the pandemic are still being felt.
A Challenging Landscape
According to data from the Federal Reserve, during 2020 and 2021, operating expenses were the number one reason why companies sought financing.
What is more, the number of business owners who gave this answer grew from 59% in 2020 to 63% in 2021.
This marks a clear departure from previous years, when operating expenses were the second most important reason to seek funding behind the desire to expand and pursue new business opportunities.
What does this all mean? Simple: the pandemic has been so challenging that instead of thinking of growing their business, companies are now focused on meeting their most basic obligations.
Why Factoring Is the Smart Move
To recap, statistics show that covering operating expenses is the main reason for business owners to seek financing. How can factoring help?
In this landscape, factoring is the smart move because it offers many important benefits compared to bank loans.
- Factoring doesn’t create debt.
- With factoring, you’re not tied to long-term contracts.
- Approval times are much shorter with factoring.
- No collateral is required to factor your invoices.
- Unlike bank loans, you can use factoring even if you’re new to credit.
ACS Factors: We Turn Your Invoices Into Immediate Cash
Looking for a Factoring company you can trust? We are located in Upland, California, and have many clients nationwide in the distribution and logistics corridor which includes Ontario, Riverside, Fontana, Jurupa Valley, and Moreno Valley.
Reach out today by email (firstname.lastname@example.org) telephone (909-946-5599), or through our social media accounts on Facebook, Twitter, and YouTube, and start converting your accounts receivable into cash today!