So, you made the decision to factor your invoices. You’ve discovered that invoice factoring allows you to get funds immediately without worrying about acquiring additional debt. Recently, you have applied for accounts receivable factoring through a factoring company and you were approved.
Now that the hard part is over, what happens next? Many businesses aren’t sure what the next steps to take after being approved for invoice factoring and receiving cash. There are some smart ways to use the funds as a means to your cash flow problems and essential needs.
Here’s Five Steps to Take After Being Approved for Invoice Factoring
1. Assess the Needs of the Business
It is important to assess what your company needs over what you want. The difference between wants and needs is simply what you desire to have versus what is absolutely necessary for survival. More than likely, there is some part of your business that could use the most help. Based on your industry, this could be the need for purchasing new inventory, covering payroll or even hiring new staff. Prioritization is key. Making yourself a list of everything your business requires from most important to least will help assess this. Allocate how much and where the funds you receive are going. If there are any funds left over afterwards, then it can go towards your wants.
2. Do Not Rush
Invoice factoring provides an alternative solution for small businesses. Invoice factoring can provide you with funds within 24 hours but it is not meant to be your only source of income. In order to get your business on the right track, take the necessary time to figure out where the funds should go. This goes along with prioritizing the needs of the business. This may involve some sacrificing but the sacrifice will be worth it when your business does better than ever before.
3. Spend Capital Wisely
Typically, bank loans come with restrictions whereas invoice factoring gives you more freedom. It is always exciting when you get the funds you’ve been needing for the betterment of your business. Whether you are a one-man show or a part of a company with multiple players, the needs of the business should come first. Spend your funds on the parts of business that will benefit the company most. You decided to factor your accounts receivables for a reason. Don’t take the funds for granted.
4. Consult with Your Team or A Trusted Advisor
If you are not sure what to do with your newly received funds, consulting with your team or a trusted advisor is best. Who knows your business better than your team? These people can help you make better business decisions with confidence. They may give you a different perspective or recommendations on whether it’s time to buy new equipment, hire new employees or anything else that will put your business in the lead. They can also help you avoid potential pitfalls.
5. Plan for the Future
Your business needs direction no matter how big or small it is. Without planning for the future, your business can be on the road to nowhere fast. Forecasting is a vital step to improving your business. This means setting defined goals for your business. Take advantage of the cash you receive from invoice factoring and put it towards what will increase your bottom line. Planning for the future involves creating a budget. Planning ahead helps your business prepare for any ups and downs you may encounter.
Always put the needs of the business first as the smart use of the funds your business receives from invoice factoring will only benefit the direction you want to take. Factoring provides the steady funding necessary to take on larger clients, hire more employees and cover all your expenses as they arise.
Blue Ridge Factors is a Virginia-based #AccountsReceivableFactoring company. We help businesses in the #construction, #healthcare, #oil, #gas, #staffing, #security and other industries get the #workingcapital they need fast. Our Business Development Officers are ready to discuss your situation and needs today. Simply call us at 1-800-530-2621, Monday-Friday, 9AM-5PM EST. You can also visit us on the web 24/7 at www.blueridgefactors.com for more information about factoring, our programs and to apply.