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

Posted on 23.July.2015 by Mike Winters | @amcomcap

Invoice Factoring vs. Bank Loans

Image: Maryna Pleshkun / Shutterstock.com

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

What Is Invoice Factoring? (And How Factoring Can Help Your Business Grow)

What Is Invoice Factoring? (And How Factoring Can Help Your Business Grow)

Image: Rawpixel / Envato Elements

Invoice factoring is a type of business financing unfamiliar to many small business owners. It provides a business with working capital and solves cash-flow problems, but it’s not like a bank loan or credit. So let’s break down invoice factoring and explain exactly what it is and how it can benefit your business.

So, what the heck is invoice factoring?

Invoice factoring is when…

Mike Winters 31.07.2021

Business Video Roundup: Successful Habits, Leadership & How Trash Makes Money

Business Video Roundup: Successful Habits, Leadership & How Trash Makes Money

Image: winnievinzence / Envato Elements

In this week’s business video roundup, Gary Vaynerchuk asks the leaders behind major companies like Logitech and McDonald’s how they stay close to culture, Brian Tracy reveals how to get started developing successful habits that will help you achieve your goals, and Marie Forleo talks entrepreneurship with Floret Farm’s Erin Benzakein, who has successfully guided her business from garage startup to global distribution. Plus,…

Mike Winters 23.07.2021

Business Video Roundup: Staying Motivated, Being a Great Leader & More

Business Video Roundup: Staying Motivated, Being a Great Leader & More

Image: ckstockphoto / Envato Elements

In this week’s roundup of great videos for entrepreneurs and business owners, Gary Vaynerchuk talks about why hyper-focus can lead to missed opportunities, Marie Forleo reveals how to stay motivated when you’re being pulled in multiple directions at once, and Brendon Burchard explains five practices that every great leader must implement. Plus, five leadership lessons from Apple CEO Tim Cook and CNBC’s incisive look…

Mike Winters 16.07.2021
Back
AMERICAN COMMERCIAL CAPITAL HOME

HOW MUCH COULD FACTORING INCREASE PROFITS FOR YOUR BUSINESS?

CALL 713-227-3863