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BUSINESS

Top Benefits of Invoice Discounting for Small Businesses

Top Benefits of Invoice Discounting for Small Businesses 40

Small businesses that struggle with cash flow challenges often need creative financial solutions to keep their business running. Invoice discounting with eCapital might be a good solution for cash flow issues because they provide a quick way to get most of what you’re owed so you can spend the cash for any purpose at all as you need it. To see if this might be a good option for you, check out these benefits.

Get Cash Fast

Invoice discounting has the top benefit of being able to get cash quickly. This allows companies to ease their cash flow problems by receiving payment for an invoice before it’s actually due. Often, companies can get cash for their invoices the same day they submit them for discounting, which means they can access that money immediately as well, allowing them to pay their employees, purchase materials for new projects, or pay the rent.

Reduces Collection Period

Most customers expect invoices to have a collection period of at least 30 days, but even one month can be too long for some companies that have a need for cash right away. Invoice discounting reduces that collection period for companies by allowing them to get paid for most of the amounts due in 24 hours or less. But, the good part is that customers still get their full collection period because the invoice discounting company won’t start collection procedures until after that term has passed.

Invoices are Collateral

With traditional loans, companies often have to put up their company assets like machinery, real estate, and other valuables as collateral. If they are unable to fulfill the terms of the loan, those assets are at risk. With invoice discounting, however, only the invoices themselves are put up as collateral. If a customer doesn’t pay an invoice, you aren’t responsible for the balance. So, if your company isn’t doing well financially, invoice discounting isn’t going to take your assets, which would likely destroy your business altogether.

Customer Relationships Stay With You

Invoice discounting companies have little to no contact with your customers, so you control the relationship. Your customers don’t even know that you’ve sold their invoices to a third party for a discount. They continue to owe the full amount to you. When the invoice is paid in full, you pay what you owe to the invoice discounting company and keep the rest.

Confidentiality

Some cash flow solutions, like invoice factoring, require companies to notify their customers because they are actually going to be paying the invoice factoring company instead of the company that provided them the service or product. With invoice discounting, though, you don’t have to notify your customers of anything. They don’t need to know that you’re partnering with an invoice discounting company and they’ll continue to deal with you directly for payment and continued service.

Conclusion

Finding a solution to cash flow problems sometimes requires a certain amount of creativity. One creative method of getting cash when you need it is through invoice discounting. But don’t take our word for it. Contact an invoice discounting company today to see how it can work for you.

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