Is Debt Factoring Auckland A Really Good Option For Your Business?

If you are thinking about debt factoring as a business finance option, then you’ll want to know about its ups and downs. For those who are not aware, debt factoring Auckland involves passing unpaid debt in the form of invoices into a chosen funder like Invoice Factoring NZ, who them provide a high percentage of the value of the invoices as advance.

Factoring is a proven and popular business finance option among small to medium-sized enterprises and if you want to see how it can fit with your business, then buckle up for a comparison of its benefits and downsides.

The Pros:

Instant Access to Crucial Funding

Many conventional business finance products call for considerable time to come to an agreement. The extensive paperwork, stock valuations that take forever and other mitigating factors lead to the loss of business opportunities that require instant funding. However, in factoring you can be approved in less than a week given that you business has a stable turnover of a certain amount and meets any checks that Invoice Factoring NZ deems necessary to assess your financial stability. So, if you need urgent financial support to fulfil peak seasons demand or for daily operations, then debt factoring Auckland can prove to be invaluable.

Save Time and Avoid Debt Chasing Admin

When you get into factoring, the process of chasing impending and overdue payments is handed over to the factoring facility. When this task is handled by Invoice Factoring NZ, you will be able to prioritize on more important business tasks like making sales and maximizing operational efficiencies.

Speed Up Business Growth

This form of business financing can ideally help increase your monthly cash flow, allowing your company to take advantage of any opportunities that arise. For a small cost, your business can use debt factoring Auckland to implement strategies that can exponentially expand your client base and services.

The Cons:

Different Businesses Call for Varying Solutions

Just like any other financing option, debt factoring isn’t suited for all kinds of businesses. For instance, if your sale’s ledger relies on a small number of key clients who are less reliant on 30 to 90 day credit terms, then chances of getting a debt factoring Auckland arrangement are meagre. Also, the current client base size can affect the finding available because of concentration restrictions imposed by particular arrangements. That means if you have a small client base, it’s best to consider another form of business financing.

Credit Worthiness

Every funder will need some assurance that the arrangement is a low risk venture and that your clients make their payments accordingly. That means if the reliability of your customers is questionable, then debt factoring may prove hard to get and you are better off with a solution like asset finance. So, it is always advisable to first take a look at what factoring options there are and then look for independent guidance to ensure that your client base’s ratings will qualify for debt factoring.

As you can see, there are various pros and cons to consider when it comes to this form of factoring. Always do your homework before making such a vital decision. To learn more about invoice finance, head over to Invoice Factoring NZ.