WHAT'S IN THIS GUIDE
Education provider is a broad category that includes supplemental educational providers that assist with academic instruction to middle and high school students outside of the regular school day. It may also include other small businesses that provide services and support to school districts.
Unfortunately, it can often take 30, 60, and even 90 days to be paid by school districts for services rendered. This can stifle cash flow and limit working capital, making it difficult to meet day-to-day expenses.
Accounts receivable factoring for education providers can help sustain your business during these times.
To ensure all students, especially those from impoverished school districts, receive a quality education, the No Child Left Behind Act of 2001 was enacted in the U.S.. Its mission was to “improve the performance of America’s elementary and secondary schools while at the same time ensuring that no child is trapped in a failing school.”
Some businesses may offer substantial resources for tutoring and mentoring students, and those with technical capacities, such as providers in the technology or computer information field, may offer technical training.
For these services, educational providers can often wait weeks or months to be paid by school districts. Providers notice a lag in cash flow, which makes it hard to buy supplies or pay expenses.
Invoice factoring allows businesses that provide services to schools and universities to unlock cash that’s tied up in unpaid accounts receivables. When you sell one or more invoices to a factoring company like FundThrough, you are advanced 100 percent of the invoice value, minus a fee.
In as little as 24 hours after approval, this amount can be deposited directly into a bank account. No more chasing down slow-paying customers. You get the cash-in-hand you need to get back to doing what you do best.
Factoring does not require collateral, and it is not a high-interest loan to be paid back in monthly installments. That means that even if you are a relatively new provider, you can still qualify. There’s no long, dragged out application process with factoring, and your credit doesn’t matter as the factoring company looks at the creditworthiness of your clients instead.
Like most types of financing, factoring has its pros and cons. That said, for most small businesses that have unpaid invoices and need a quick infusion of cash in a relatively short period of time, factoring cannot be beaten.
No matter what industry sector your business falls in, your factoring is only limited by your outstanding invoices. This may not be enough support to fill the gap between billing and getting paid, and you may need additional funding for larger purchases.
In the past, factoring was largely misunderstood. Business bank loans and lines of credit were the traditional and accepted forms of financing, along with credit cards. Each of these different funding options have pros and cons to consider.
Costs for a new or growing business can be significant. You may need to purchase equipment and inventory, pay employees, and keep up with rent, taxes, and marketing. You may consider taking out a business loan.
A line of credit (LOC) is a lot like a credit card. You can borrow/withdraw money up to a certain maximum amount determined by your financial institution. You can cover day-to-day expenses and pay back your debt, only to borrow again when needed.
Like all forms of funding, business credit cards must be used wisely or things can go sideways very quickly.
Invoice factoring is not a loan. The application process is quick, there is no repayment obligation, no high interest rates, and no debt to record on your wholesale company’s balance sheet. Plus, many more companies will qualify.
Choosing a wholesale factoring partner is a lot like choosing any lender. It pays to do your homework. There are also several questions to ask prior to starting the application process:
Most factoring companies work with most industries, but not all. Some factors specialize in only a few industries.
FundThrough works with education providers.
Advance rates can range from 60% to 100%, depending on the factoring company and sometimes the industry.
FundThrough advances 100% off the invoice amount, less a fee.
A factoring company should be able to provide what factoring fees it charges upfront. But some companies may make it difficult to determine the total costs of using their service. FundThrough offers transparent pricing so you know prior to signing an agreement.
FundThrough pricing – 100% advance rates minus a flat fee. One upfront price.
A minimum is the amount you must factor every period (month, each quarter or every year). Some factoring companies offer plans that require minimums, while others do not.
FundThrough doesn’t require minimums. Only fund when you need to.
Cash flow is the number one problem for most start-ups and small businesses, especially if they’re growing. This is also true for wholesale companies. Invoice factoring companies typically consider several situations before offering you an advance.
Factoring invoices is a sound financial strategy if you—
FundThrough takes the legwork out of accounts receivables financing. It’s fully automated platform is easy to navigate, it’s fee structure is transparent and a customer service rep is there when you have questions. Find out what FundThrough’s clients have to say, and start factoring your invoices today.
Interested in possibly embedding FundThrough in your platform? Let’s connect!