According to the U.S., there are approximately 8,300 engineers in the NCEES (National Council of Examiners for Engineering and Surveying). In Canada, there are about 2,000 job openings (on average) every year in each engineering segment, including civil, mechanical, electrical, industrial, petroleum, environmental, and others. Needless to say, engineers keep the world up and running.
However, even the most successful firms can experience periodic falling returns, feel the crush of high operating costs and projects that take months, sometimes years, to complete, leading to delays in cash flow and working capital. This can hinder growth and makes taking on new contracts difficult. Engineer invoice factoring can help.
Invoice financing for small businesses is designed to help engineering companies solve their cash flow problems. It enables them to quickly unlock tied-up cash in unpaid invoices from slow-paying customers—sometimes in less than 24 hours.
When you wait 30, 60, 90 days for customers to pay, it can put pressure on your business, and you may take on less work, sign fewer new contacts, and find it difficult to meet payroll or keep up with general operating expenses.
A factoring company can advance up to 100 percent of your invoice(s) value, which allows your firm to access working capital quickly by turning unpaid invoices into cash. You choose which invoices to factor—no more chasing after customer payments.
Factoring gives engineering firms access to the cash they’ve already earned. But unlike a loan or line of credit, factoring does not require you to pay back the funds with interest. In fact, the benefits far outweigh those of a loan.
The benefits of invoice factoring span across each segment of engineering.
Your company can’t wait 30 to 90 days to be paid by customers. Factoring bridges the gap between issuing an invoice and receiving payment so you can access capital tied up in outstanding accounts receivable right away.
Factoring can be an excellent option for small businesses and start-ups. Unlike a loan, factoring doesn’t require a good credit score, a stellar credit history, or that you’ve been in business for many years—no new debt or jumping through hoops as with traditional lending.
Invoice factoring lets you borrow funds to cover your payroll, advertise, purchase inventory and equipment, and expand your operations, even while waiting for payment from your customers. With a loan, you might wait days or even weeks to get your money. Factoring lets you put your money to work right away.
No more waiting for 4, 8, or even 12 weeks to collect payment from your customers. Factoring puts the control back into your hands by unlocking virtually unlimited growth and access to capital, sometimes in as little as 24 hours.
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 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 engineering companies.
Advance rates can range from 60% to 100%, depending on the factoring company and sometimes the industry.
FundThrough advances 100% of 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 up front 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!