WHAT'S IN THIS GUIDE
The information technology (IT) sector is in constant flux as breakthroughs in technology reshape networks, alter safeguards for data and information, automate systems, and troubleshoot problems for small businesses and large corporations.
Such developments often require large outlays of cash to stay competitive in a challenging market.
Companies must retain the latest equipment and hire trained personnel to remain ahead of the curve. A stable source of working capital and continuous cash flow can bridge the gap between providing a service, invoicing your customers, and getting paid.
Information technology invoice factoring provides a reliable source of working capital and fast access to money you’ve already earned, giving you complete control over your cash flow. It doesn’t matter if you’ve been in business for many years or a few months; small business factoring companies can help.
Slow payments on your accounts receivables can derail your business. You spend time chasing payments and lack cash for making payroll or taking on large projects.. Factoring is not a loan to be paid back with interest. You create no new debt that shows up on your company’s balance sheet. Instead, an IT factoring company, like FundThrough, purchases your open invoices and advances you the full invoice amount, less fees, as soon as the next business day upon approval.
Information technology invoice factoring benefits startup tech companies and large corporations. Just a few of the companies that can reap the rewards of factoring include:
Your company provides products and services to a wide range of customers. Sometimes those same customers pay 30, 60, or even 90 days after the work is completed. Factoring your invoices gives you the capital necessary to run your business right away.
IT companies might use the funds from factoring to:
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 IT 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 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 IT 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 IT businesses, especially if they’re growing. This is also true for IT 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!