The Importance of Business Factoring Services

Small business are hugely important here in the United States, there is certainly no doubt about this fact. After all, with up to 28 million various types of small businesses spread throughout the country, it has even been found that small businesses actually make up around 99% – more than 99%, even – of all businesses based here in the United States. Unfortunately, however, these small businesses, defined by having no more than 50 employees, are also more susceptible to failing.

Much of these failing businesses can pin their woes directly on finances and struggles with cash flow. Unfortunately, cash flow is a huge problem for such businesses all throughout the United States and actually is behind more than 80% of the failures seen by failed business. This can be seen clearly when we look at more of the data that has been gathered on this subject, as the data clearly shows that there were more than 25,000 companies filing for bankruptcy in the year of 2016 alone, let alone in the years prior or in the years that have transpired since.

But why do such issues with cash flow happen so frequently and why is bankruptcy so commonplace for businesses here in the United States – particularly small businesses? In many cases, it actually goes back to invoice payments. Unfortunately, invoice payments are paid late far more frequently than they are paid on time, in actually about 60% of all cases. Invoice payments paid late – even just a little late – might not seem like all that big of a deal, but it’s something that can actually have quite the tremendous impact when we add up all these late or missing payments for small business throughout the United States.

The results are actually staggering, as they have found that, if only all invoices were paid on time, more than two million additional employees would be able to brought into the workforce in small businesses here in the United States. Of course, this would be something that would be hugely beneficial overall for job creation, but it is also something that very much shows the incredible scope of how much money that really means would be available. In fact, that number has been calculated and collectively throughout the small businesses of the United States, it’s currently estimated that, if all invoices were paid by their due date, employment would improve by more than 25%, more than a full one fourth which is certainly far from insignificant by just about any standards here, where matters of employment have always been (or have been felt to be) somewhat contentious.

Fortunately, there are steps to take for small businesses to get the money from unpaid invoices that they need. For many small businesses feeling the brunt of unpaid invoices, invoice funding companies can help. Invoice funding companies often provide services like transportation factoring as well as general business factoring, allowing invoice funding companies to give loans to the small businesses that are so greatly in need of them.

In fact, invoice funding companies and other such business factoring companies can often provide a wider array of services than many people even realize. Typically, these invoice funding companies will offer loans for around 90 days of unpaid invoices that a company might be struggling with, but some invoice funding companies will offer 60 day periods of loans as well as loans for the invoices that have not been paid over the last 120 days or so.

Of course, however helpful the best invoice factoring might be and no matter how essential of a service it is that they provide, it’s very important not to forget that they do offer loans and managing a loan carefully is essential, no matter what type of loan it is. Simply working to pay it off as quickly as is possible will be a crucial and critical step for most small businesses, and ideally the loan should be paid off as soon as the necessary invoice payments finally do come in. All in all, while invoice funding companies provide important services, they should still be treated with care by businesses.