Messages from clients like the following are why we love what we do.

“I was telling my employees that this is the first time in 26 years that I’m going to be able to relax over the holidays. There was always someone who forgot to sign the checks who left me hanging. Now I don’t have to worry anymore.”

Do you wish this was you? Do you wish you could be relaxing this holiday season? Do you wish you could stop worrying about cash management?

Realities of owning a business

Of course, like all businesses, you want to make a profit. But that means nothing if you don’t enjoy what you do.

Some people, like this client, don’t go into business in hopes of building an empire. They start a business in wanting to build a better quality of life for their families and spend more time with them.

In 26 years of owning his business, this client has never been able to enjoy a major holiday without worrying about money, whether his company would make payroll. He fretted that clients would shut down, accounts payment personnel would take off for a long holiday break, check signers would fly out to be with their families, or any other situation that caused his cash flow to become a hot mess over the holidays.

That’s not good.

Imagine stressing about all this for 26 Thanksgivings, 26 Christmases, 26 New Years, 26 Easters, 26 Passovers, 26 [fill in the blank with your important holiday].

That’s not healthy.

Granted, entrepreneurs and business owners know that hard work and long hours come with the territory. But it shouldn’t come at the expense of never taking a break from work, never relishing holidays, and never being with loved ones for special occasions.

Owning a business has many advantages and disadvantages. For this owner, cash flow especially during holiday season, was No. 1 on the list of disadvantages. It took the joy out of celebrations.

How a client stopped worrying and started celebrating

So what happened to this client to change things for the better?

Factoring solved his holiday cash flow problem. All he had to do was send out his accounts receivable. Within hours, he received payment for those invoices.

Instead of him calling customers to beg for checks, the factor paid his invoices. The client didn’t have to wait 30, 60, or more days for his customers to pay up. That was now the factor’s problem.

As a factor, we deal with accounts receivable every day. It’s our job. It’s what we do best. Collecting on invoices isn’t another item on our long list of tasks that have nothing to do with our core business. It is our core business.

For most business owners, it’s another task that has to be done. If clients would just pay their invoices on time without prompting, then this wouldn’t be a problem.

Unfortunately, it’s a widespread problem.

Fortunately, it can be easily fixed if you have unpaid invoices.

What is factoring?

Factoring is financing your accounts receivable. Instead of a bank loan, you put up your invoices for financing. You won’t find factoring services at banks. You’d need a financial services company that provides factoring services.

The one distinct advantage factoring has over bank loans is that you don’t pay anything back. The money is yours because it’s what your clients owe you. Like with all financing programs, you pay a fee for using the services. Instead of writing a check to pay the fee and watching your bank account shrink, it comes out of your invoice. The only thing your bank account sees is more cash, not less.

A factor looks at your clients’ ability to pay, not yours. How long you’ve been in business and whether you have had credit bumps in the road have no bearing on whether your business would qualify for invoice financing.

Factoring questions to ask

If you’re thinking about factoring, here are some questions to ask a prospective factor:

• How long does it take to set up a new client?
• What are the set-up fees? Are they refundable?
• How do you work with my clients?
• Who bears the risk if my client files bankruptcy? (Not all are recourse factors.)
• How fast do you pay invoices after I submit them?
• How do you send the money?
• What are the charges for expedited funding like wire transfers?
• How many invoices need to be funded through you?

How factoring actually improves your business

If you do nothing, then you’ll continue to chase down payments and spend a lot of time trying to ensure you have the money to pay expenses. These can eat away any opportunity to grow your business.

Here’s what happens when you choose factoring:

• Make payroll … Every. Single. Time.
• Stop wasting time chasing payments.
• Erase stress of making ends meet.
• Hire new employees.
• Purchase inventory.
• Send employees to training.
• Take on new opportunities.
• Grow your business.

Working with a factor who provides invoice financing allows you to maintain a healthy cash flow and simplify cash flow management. You won’t be worried about your clients taking off two weeks or more for the holidays leaving you in the lurch.

Isn’t it time to cut the cash flow headaches and cherish your holiday time off?

Image credit: Sarah