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: Customer Experience, Mentorship & Marketing with Humor

Business Video Roundup: Customer Experience, Mentorship & Marketing with Humor

Image: vanenunes / Envato Elements

In this week’s business video roundup, Popmenu CEO Brendan Sweeney talks about creating a positive customer experience in the restaurant industry, award-winning creative director David Stevanov explains how to use humor to deliver a serious message, and Patrick Bet-David reveals how to find the best mentors. Plus, Marie Forleo offers up a movie-length how-to on understanding and managing anxiety, while CNBC presents an exclusive…

Mike Winters 24.06.2022

Business Video Roundup: Tell a Great Story, Sell Your Business for $1 Billion & More

Business Video Roundup: Tell a Great Story, Sell Your Business for $1 Billion & More

Image: bernardbodo / Envato Elements

In this week’s roundup of great videos for entrepreneurs and business owners, award-winning creative director Josh DiMarcantonio talks about how he helped launch one of Taco Bell’s most successful advertising campaigns with the power of good storytelling, Waze cofounder Uri Levine shares his successes and failures on the way to selling his business to Google for $1 billion, and Hunt & Fish Club owner…

Mike Winters 17.06.2022

Business Video Roundup: Restaurant Marketing, Gaining Customer Data & More

Business Video Roundup: Restaurant Marketing, Gaining Customer Data & More

Image: macniak / Envato Elements

In this week’s business video roundup, Harry’s CEO Andy Katz-Mayfield talks about how his men’s shaving-products company managed to navigate setbacks during the pandemic, America’s Best Restaurants CEO Matt Plapp discusses why point of sales are a key way to gain important customer data, and Carats & Cake founder Jess Conroy reveals how she broke into the wedding industry and continues to grow her…

Mike Winters 10.06.2022
Back
AMERICAN COMMERCIAL CAPITAL HOME

HOW MUCH COULD FACTORING INCREASE PROFITS FOR YOUR BUSINESS?

CALL 713-227-3863