INVOICE FACTORING VS BUSINESS LOAN

Factoring does not require a company to take on additional debt. While it is often necessary for businesses to borrow money in order to get started and stay afloat, it is generally accepted that the less debt used, the better your Balance Sheet, Financials, Ratio’s and Investor Perception. Having debt makes it harder to get loans in the future, debilitates an organization’s leverage, and also puts a lot of pressure on companies to pay it back. Factoring allows companies to receive needed capital without the hassle and risk of using a loan.

If a company needs money fast, there are few better options then invoice factoring. In less than 5 days, a company can receive up to 90% of their outstanding invoices. After initial funding, SouthStar can provide funding within 24 hours of receiving an invoice. This makes it a perfect option when a company needs a quick infusion of cash, needs to manage cash flow, or wants to ensure they are reporting the strongest financials they can.

Simplistic, Fast Process

In order to receive a bank loan or a line of credit, it is necessary to provide a number of proofs that you are a good credit risk. A company will need to provide all of their financial statements, have very good credit, and have been in business for a good amount of time, generally more than 3 years. In contrast, invoice factoring lenders’ biggest concern will be the credit of the entity (debtor) that owes on the invoice. This non-traditional approach takes a lot of pressure off the company in need of money.

No Debt to Payback

Because the money advanced is not a loan, it does not have to be paid back. As a result, there are no payments, principal, and interest to be made. The invoice is paid back by your debtor when payment is due and they receive no hassle about early payment, in turn increasing customer satisfaction.

SouthStar Handles Collections

Not only will Southstar Capital advance the company a lump sum of money up-front, they will also handle collection duties for ALL invoices (even invoices not being factored). For businesses without a collection department, this provides a much needed and valuable service. For companies with a receivables department, this provides a HUGE savings that mitigates or eliminates the cost of financing, as well as, eliminates the need to offer discounts for receiving payment sooner than credit terms agreed upon. Therefore, lowering or eliminating the financing costs.