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 LoansWhen 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: Entrepreneurship, Marketing & Tips for Success in 2021

Business Video Roundup: Entrepreneurship, Marketing & Tips for Success in 2021

In our latest roundup of great videos for entrepreneurs and business owners, Patrick Bet-David does a 30-minute Q&A about all things entrepreneurship; Gary Vaynerchuk talks to a dozen leaders from companies like Kroger, KFC, and Delta Air Lines about marketing in 2021; and Fast Company’s Pavithra Mohan offers a few tips on building a strong, collaborative remote workforce. Plus, Entrepreneur brings together a successful venture capitalist and an up-and-coming business…

Mike Winters 22.01.2021

Business Video Roundup: Pricing Strategy, Finding New Customers & Surpassing Competition

Business Video Roundup: Pricing Strategy, Finding New Customers & Surpassing Competition

In our latest business video roundup, Gary Vaynerchuk and Shark Tank’s Barbara Corcoran discuss the key factors that will drive business growth in 2021, Marie Forleo explains a simple pricing strategy that actually works, and Entrepreneur editor-in-chief Jason Feifer leads a talk on how to grow your business by finding new customers outside your local market. Plus, Keith Ferrazzi (consulting guru and bestselling author of Never Eat Alone) shares his…

Mike Winters 15.01.2021

Business Video Roundup: 2021 Strategy, Self-Discipline & Future of the Restaurant Industry

Business Video Roundup: 2021 Strategy, Self-Discipline & Future of the Restaurant Industry

In this week’s roundup of great videos for entrepreneurs and business owners, Gary Vaynerchuk talks about various growth strategies for 2021, Marie Forleo offers up tips on how to get more done in less time (without burning out), and Brian Tracy reveals five self-discipline hacks that will help you achieve more in the new year. Plus, Danny Meyer (founder of Shake Shack and Union Square Hospitality Group) discusses the future…

Mike Winters 8.01.2021
Back
AMERICAN COMMERCIAL CAPITAL HOME

HOW MUCH COULD FACTORING INCREASE PROFITS FOR YOUR BUSINESS?

CALL 713-227-3863