Thinking of selling your invoices? Consider more than just the fees. Could your business thrive with this extra cash flow? Here's what you need to know to make an informed decision.
What Determines Your Fees and Advance Amounts?Several factors play a role:
Fees range from 2-5% of the invoice value. For instance, a $1,000 invoice at a 3% fee costs you just $30.
Understanding AdvancesWhen we purchase your invoice, you immediately receive a portion of its value, typically 60-95%. For example, on a $1,000 invoice with an 80% advance, you get $800 upfront. The remaining amount, minus our fee, is paid to you when your customer settles the bill.
Comparing to a Bank LoanSelling invoices might seem costlier than a bank loan, but consider the differences. Bank loans offer lump-sum funding with ongoing interest, whereas invoice selling provides continuous cash flow. With invoice selling, there's no lingering debt, and you potentially access more funds over time.
Maximizing Profit MarginsEven with a slim profit margin of 3%, selling invoices could be the key to increasing your business volume and, in turn, your overall profits. More business means higher profit margins as fixed costs remain largely unchanged.
Real-Life Scenario: Doubling Sales with Invoice SellingCompare these two scenarios: Without selling invoices, your net profit on $50,000 monthly sales might be $1,500. But with invoice selling, you could potentially double your sales to $100,000, skyrocketing your net profit to $10,000!
Getting Most of Your Money UpfrontWorried about only receiving 80% upfront? Remember, from your second month, you're effectively getting 97% of your money, considering the rolling advance payments.
Managing Longer Payment TermsIf your customers take longer to pay, you have options. You could wait to sell invoices after 30 days or prioritize faster-paying customers' invoices for immediate cash flow.
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If you need cash and you're sitting on a lot of unpaid invoices then factoring with us is the way to go. We'll give you the cash that your business needs and collect from your customers.
Debt is risky while at the same time being beneficial to growing a business. Start-ups can relieve themselves of the risk of debt and still create capital with factoring.
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