Life for equipment and furniture wholesalers is a double-edged sword. While recent advancements have made certain elements of their work significantly easier, the industry has simultaneously become increasingly chaotic. One difficulty goes away, only to see another take its place. But wholesalers are no strangers to ups and downs, especially when it comes to cash flow. Countless external circumstances and the constant need for improved efficiency result in drastic ebbs and flows in their finances. A closer look into their books, however, will reveal that a great deal of these challenges tie back to one, central problem: not being paid when it is convenient for your business
Wholesalers must often wait well over a month to be paid in full, making them highly vulnerable to cash squeezes. And that’s just the cash they use for day-to-day operations. What happens when the only way to survive is to grow? A sensible option is contacting a company like United Capital Source for accounts receivable factoring.
Why This Program Is So Perfect For The Industry
Accounts receivable factoring is when a business sells its outstanding invoices to a business lender. Instead of waiting 60 or even 90 days to be paid, you would be paid in a matter of days. This business funding program does not require tedious paperwork, collateral, or any sort of lengthy screening process. Borrowers can even be approved with poor credit because in this situation, it’s the borrower’s client, not the borrower itself, that must pay the business lender back. So, as long as your client has never failed to pay you in full, the invoice will most likely be sold.
Instead of interest, the business lender’s fee comes in the form of two small discounts. The first is on the price of the invoice. It is not sold for the exact amount that is owed to you. As soon as the client pays the business lender, the discount is paid back to the borrower, minus a percentage, which is the second discount.
A big reason accounts receivable factoring is so ideal for wholesalers is the fact that the usually work with bigger companies. Invoices owed by big companies are logistically more valuable, despite their reputation for delinquent payments. What big companies do very well, on the other hand, is process orders quickly. With accounts receivable factoring, new invoices are more valuable than older ones.You could essentially strike a deal with a new, big client and get paid as soon as the order is processed.
Productivity Cannot Remain Stagnant
Much like all of the other small business loans offered by United Capital Source, accounts receivable factoring automatically puts more time and less stress into your work day. This is especially crucial for wholesalers because they are always looking for new ways to increase productivity. No longer do you have to send emails and phone calls for weeks on end just to make sure your payment is going to come in on schedule. You can instead concentrate on the different investments you can now make to do more business.
Some of today’s most successful wholesalers have invested in large sales teams, technology and equipment to boost cash flow. Others use accounts receivable factoring to cover monthly or upcoming expenses, like bills or tax payments. This creates an industry advantage during slower periods, when competitors might shrink their advertising budget, miss out on discounted inventory, or sell inventory at lower prices just to pay their bills on time. What’s better than paying your bills on time? Paying them ahead of time, which is entirely feasible with accounts receivable factoring. Profits will increase as clients give you discounts in exchange for helping them grow their businesses just like yours.
Putting The Ball In Your Court
In the wholesale industry, success tends to be more within reach for companies that can afford to work with the biggest clients. Their orders are larger, they take longer to pay, and prefer to sign with clients that will play by their rules. Accounts receivable factoring lets you not only offer more lenient terms to potential clients but also hire the experienced, multi-faceted salespeople capable of snatching them up. A long-term goal of many wholesalers is to build an in-house sales team that handles current customers and another team of independent contractors to perform individual marketing efforts, like going to trade shows.
You may have heard that accounts receivable factoring is a sign of a failing business. No client would sign with a company that cannot manage its own finances. This perception is just as outdated as the notion that only bad business owners have bad credit. At United Capital Source, we can assure you that accounts receivable factoring will only strengthen your business partnerships. The client will not find out the invoice has been sold and we will not “force” the client to pay up immediately. You can’t afford to wait but we can. That’s our job; not yours.
There Has To Be A Limit For Use, Right?
Since accounts receivable factoring is so convenient, you’re probably under the impression that it cannot be used all the time. We are delighted to inform you that many UCS clients finance new receivables every one or two months. If the demand is there, we can most likely help you fill it. Even if you get an unusually large order. With other types of small business loans, trust is gained by paying the debt back. In the case of accounts receivable factoring, you gain the ability to factor invoice after invoice simply by continuously improving efficiency and expansion your business. Every time you sell an invoice, another tool for growth enters your arsenal.