Top 5 Reasons to Factor: How to Eliminate Time-Consuming Back-office Work and Make Money Fast

For many appraisers, maintaining profitability relies upon your ability to wear multiple hats. In addition to your primary role appraising properties, you may also take care of scheduling, marketing, communications, and even billing. While this can initially seem like a great way to save a few dollars, it often results in headaches and lost profit down the road.

As cash flow slows down or stops, businesses lose the ability to expand, stay current on operating expenses, and spend their time doing the actual work of the business, which they’re uniquely equipped to do. The business owner ends up spending more time on the business than in the business, inhibiting growth and limiting productivity.

It is crucial to find ways to outsource the time-consuming and complicated parts of your business in today’s bustling market. Factoring, which is simply the process of selling your accounts receivable (or invoices) to an outside company, is an easy way to free up your schedule and efficiently put money in your account faster, utilizing your skills to do the things you’re best at.

Why factor?

To understand the benefits of factoring, it helps to identify alternative options. Some appraisers or other business owners choose to handle invoicing themselves, in which they submit an invoice for payment to the client for whom the work was completed. On average, standard payment terms are around 30 days.

Alternatively, you can send the invoice directly to a factoring company. They’ll collect a small fee, and you’ll have your money in a day or two.

In this article, we’ll address five fantastic reasons to factor, including improved cash flow and increased time for you to spend on other things, either business or personal. Ultimately, factoring exists to make life easier for everyone in a way that is cost-effective and simple. Though it may sound too complicated or even too good to be true, it isn’t! When you work with the right company, factoring becomes an effortless process you can’t live without.

Flexible payment options

Whether you need money tomorrow or can stand to wait a day or two, factoring companies have your back, ensuring your invoices are paid and your cash is accessible as soon as possible. Receive payment electronically to speed up the process and minimize the hassle with a centralized disbursement platform that minimizes the need for you to monitor payment statuses, freeing you up for the work you’re best at.

Improving your cash flow

Factoring is simply the sale of accounts receivable to an outside entity that works as a partner to your business. Sometimes, businesses choose to borrow against accounts receivable, which is referred to as accounts receivable financing. But there’s nothing better than getting paid quickly for work you’ve done, and factoring enables this process, putting money in the bank as soon as the very same day. Because you aren’t stuck waiting around for a customer to pay an invoice, you’ve got the working capital to pay business expenses, reward employees, or fund endeavors that grow your business and help you meet your goals.

By selling the value of what is owed to you before it is officially paid, you get cash immediately to spend as you wish, which is especially helpful if you employ other people who need to be paid. Factoring allows easy access to your money, improving cash flow and working capital for businesses of all sizes.

Eliminate collection calls

Factoring helps eliminate lengthy paperwork, but it also helps get rid of collections calls. When you work with a factoring company, once the debtor is approved and the invoice is verified, the factoring company assumes 100% of the collection risk. This means that you’re free to spend your time and energy elsewhere because, no matter the payment or will of the person responsible for payment, you’ve got cash in hand and are not on the hook for seeking payment.

For many business owners, the prospect of making collections calls is overwhelming and unpleasant. In close communities, it can even damage relationships. Luckily, factoring companies can provide full-service billing, customer credit checks, and collections support so you don’t have to.

Avoid time-consuming back-office work

Managing your own accounts takes considerable time, which can be difficult or impossible for small businesses to manage. Factoring saves you time by outsourcing the time-consuming work of managing invoices while allowing you to focus on your area of expertise. Companies have entire departments with full-time staff dedicated to managing invoices and settling accounts, so don’t expect that you’ll be able to do it yourself on top of everything else. Sometimes, this particular hat is just one too many.

Outsourcing is a great solution for highly specialized tasks like accounting. Remember, on average, it takes 30 days to process a single invoice without the aid of a factoring company, and that can be a conservative estimate. When you work with a factoring company, you can expect money as soon as that same day if you must have it, or worst case, the next day.

Get paid fast

Perhaps the best thing about working through a factoring company is the ability to have cash in hand quickly. While a 24-hour turnaround is fairly standard, many companies can, for a fee, work within the day to get you your money.

Once you’ve got the cash in hand from the work you’ve completed, you’re free to move on, without restriction, to the next task.

How to begin

Once you’ve chosen the factoring company you want to work with, fill out an application, which will typically be reviewed within a few days. Generally, you will sign a contract (length varies, depending on a variety of factors), and determine what invoice volume you wish to submit. You’re usually not obligated to utilize your factoring company for each invoice you receive, allowing you to design a custom solution that works for your specific business.

Once you’re set up, you need only submit your invoices and let your factoring company take care of the rest.

Want to know more? Schedule a demo with Sekady Capital and let our experts show you how simple your invoice process can be!