If you’re in the B2B services sector, you know it’s not uncommon to wait 30, 60, or 90 days to get paid by your customer. While offering payment terms to your customers is common, when those customers take an additional 30, 60 or 90 days beyond those terms to actually pay their invoices, it can create serious cash flow problems. You can bridge these working capital gaps with the reliability and security of Capstone.
Cash flow is the lifeblood of any business, and slow-paying customers can put a crimp in and create gaps in your working capital that you need to reinvest to grow your business, pay your suppliers and employees, meet financial obligations, and keep your operation running smoothly.
Service companies are uniquely structured and often have fewer physical assets, equipment, and/or inventory that can be leveraged or used as collateral for financing. It can be extremely difficult for your type of business to bridge gaps in its cash flow and qualify for traditional financing options such as a bank loan or line of credit. Capstone’s invoice factoring solves this problem by providing your company with immediate cash flow for outstanding account receivables.
Accounts receivable factoring can benefit almost any B2B business in the service industry, including:
1You submit an invoice/ progress payment on work that has been completed
2The invoice is verified with your client
3Capstone provides immediate funds
4Your client remits payment within their payment terms which is typically 30 to 60 days
5Capstone issues a rebate for the remaining reserve balance, less the factoring fee
One of the best reasons to consider factoring your invoices with Capstone is that we offer fast turn-around times and have easier approval requirements.
We know qualifying for a bank loan or line of credit is difficult. The current economic cycle has banks pulling away from lending to many well-capitalized companies. If you are less established or are recovering from the pandemic, factoring is the most effective and efficient way to accelerate your working capital and keep your company on track. In the best of economic times, banks often have lengthy applications, and strict credit requirements, require personal guarantees, and want businesses to have an established track record before making a loan. Once you have submitted all of the paperwork they require, it could take six to eight weeks (often times more) for approval and several more weeks before actually getting funded. This can hamper your ability to grow your business and take on new contracts or projects that you must take advantage of. Some of the benefits of invoice factoring include:
One other key benefit of using Capstone’s factoring service is that, unlike a business loan, factoring does not create debt or require you to put any physical assets up as collateral.
Single invoice factoring is an ideal solution for service companies with short-term immediate cash needs. It does not require a multi-year contract and allows you to sell invoices to Capstone only when you need working capital. This can be a one-time occurrence or as frequently as needed; there is no obligation for a specific number of invoices. Single invoice factoring provides you capital from the expected customer payments by selling those receivables to Capstone in exchange for a cash advance. While other forms of factoring require multi-year contracts, single invoice factoring is available and only needs to be used when it makes sense for your business.
For companies that need ongoing invoice factoring, Capstone also provides discount factoring services using the entirety of your accounts receivable assets as collateral. Discount factoring can be a program to purchase all of your eligible accounts receivable so you have continuous and reliable cash flow. This is ideal when you have an ongoing need to transfer invoice balances to maintain cash flow. Typically, Capstone will purchase each invoice and then provide working capital advances, holding a small portion of the invoice amount in reserve. Capstone handles the collections process, and when your client pays the full amount, the reserve is released to you, less a small commission.
If you are a service-based business, don’t let a lack of funds stop you from growing your business. Speak to a factoring consultant at Capstone today to accelerate your cash flow; call (212) 755-3636.
