Invoice Factoring vs. Bank Loans: 6 Reasons to Choose Factoring for Your Business

Posted on 8.October.2021 by Mike Winters | @amcomcap

Business People Shaking Hands - Making a Deal for Invoice Factoring or Bank Loan?

Image: LightFieldStudios / Envato Elements

When it comes to injecting your business with positive cash flow, there are several reasons you should consider invoice factoring over bank loans. Invoice factoring, for those who don’t know, is the process of selling your accounts receivables to a factoring company, thereby turning your unpaid invoices into immediate cash. In other words, you’re not waiting 30 to 90 days for a client payment—you get cash up front, which prevents the dreaded cash-flow crunch from hurting your business.

For more info about invoice factoring, see our blog posts:

Here are 6 reasons to choose invoice factoring over a traditional bank loan.

1. With invoice factoring, you usually get cash for unpaid invoices within 24 hours. After you submit an application for a bank loan, on the other hand, it could be 30 to 60 days before you see any money—that is, if you’re even approved.

2. Invoice factoring approval is not based on your business’s credit history. It’s based on the credit-worthiness of your clients or customers. If your business is new or has spotty credit history, the chances of being approved for a small-business or bank loan are slim to none. Factoring, however, checks the credit of your clients and you’re much more likely to be approved.

3. Invoice factoring has a simpler application process. Applying for invoice factoring is simple and takes just minutes of your time, while the application process for bank loans can be complicated and exhausting.

4. Unlike bank loans, invoice factoring does not require covenants. Bank-loan covenants and clauses can lead to some serious regret down the line, while invoice factoring is not hampered by such potentially business-limiting restrictions.

5. Invoice factoring helps your business with credit management and collections. The invoice factoring company typically handles collections on the invoices sold to them, so your business can forget about hassles like billing, credit checking, or stressing about getting clients to pay on time. Try to get a bank to help you with all that!

6. Invoice factoring does not saddle your business with debt. It’s an inevitability that bank loans must be paid back (with interest!). When it comes to invoice factoring, however, there is no debt. The factoring company buys your invoices outright (at a small discount, of course) and that money is yours. No debt!


American Commercial Capital, LLC, has provided invoice-factoring services to Houston-area small businesses since 2003. We also provide factoring services to businesses in San Antonio, Dallas, Austin, Fort Worth, and other nearby cities in Texas.

If you want to learn more about how invoice factoring can help your business, give us a call at 713-227-3863, contact us here, or fill out our form for a free, no-obligation quote.

image description

Roy Brooks and American Commercial Capital, LLC, has provided invoice-factoring services to Houston-area small businesses since 2003. We work with businesses in San Antonio, Dallas, Austin, Fort Worth, Beaumont, Port Arthur, Corpus Christi, and other nearby Texas cities.

If you want to learn more about how cashflow-sensitive invoice factoring can help your business, give us a call at 713-227-3863, contact us here, or fill out our form for a free, no-obligation quote.

READ MORE FROM AMERICAN COMMERCIAL CAPITAL

Business Video Roundup: How to Start an LLC, Overcome Fear & Kick Your Business Up a Notch

Business Video Roundup: How to Start an LLC, Overcome Fear & Kick Your Business Up a Notch

Image: Nikolaydonetsk / Envato Elements

In this week’s roundup of great videos for entrepreneurs and business owners, LegalZoom shows you how to start an LLC in Texas (along with some quick tips!), Gary Vaynerchuk drops some great advice on overcoming fear and letting employees help you take your hands off the wheel, and celebrity chef/restaurateur Emeril Lagasse reveals how prioritizing people allowed him to grow his business empire.…

Mike Winters 2.12.2022

Houston Factoring Companies: Why Choose American Commercial Capital for Invoice Factoring?

Houston Factoring Companies: Why Choose American Commercial Capital for Invoice Factoring?

Image: SeanPavonePhoto / Envato Elements

If you are a Houston-based entrepreneur who has been searching for ways to improve your business cash flow and get the capital you need to grow, chances are you’ve come across a dozen Houston factoring companies who all claim to be the answer to all your problems. Invoice factoring, to put it simply, is when a business sells its accounts receivable (invoices) to…

Mike Winters 25.11.2022

Business Video Roundup: Is Email Marketing Dead? + Tips on Leadership & Employee Retention

Business Video Roundup: Is Email Marketing Dead? + Tips on Leadership & Employee Retention

Image: wayhomestudioo / Envato Elements

Some people believe email marketing is dead, but Marie Forleo knows that’s not true. “I can’t believe it,” she says, “because it’s the one area that makes you the most money if you do it right.” In addition to Forleo’s advice on email marketing, this week’s roundup of great videos for entrepreneurs and business owners includes Gary Vaynerchuk on the changing perception of…

Mike Winters 18.11.2022
Back
AMERICAN COMMERCIAL CAPITAL HOME

HOW MUCH COULD FACTORING INCREASE PROFITS FOR YOUR BUSINESS?

CALL 713-227-3863