Article 4: Online Invoice Factoring for Risk Management

Recently, we discussed the benefits of outsourcing accounts receivable work by using a factoring firm. Certainly it makes sense from a workflow perspective; letting accounts receivable loans experts handle your company’s invoicing clearly saves you time and money. Still, there are far greater benefits to working with a one of the best factoring companies than reducing your internal accounts receivable department workload and costs.

Online factoring companies such as Fast A/R Funding are also invaluable resources when it comes to risk management. First, factoring firms evaluate credit risk on a daily basis and have access to extremely sophisticated credit evaluation tools that simply aren’t available to smaller companies. This means when you choose commercial finance factoring, your factoring firm can help you make more informed decisions about when to extend credit, when to increase or decrease existing credit limits, and when to consider working with customers on a cash basis instead of small business factoring invoice.

Beyond evaluating credit risk, a factoring firm has the tools to constantly manage accounts receivables. For example, Fast A/R Funding utilizes proprietary software that allows constant monitoring of your company’s accounts receivables. This means invoices never fall through the cracks, further reducing your risk when you choose to extend credit. Fast A/R Funding also allows clients to manage their loans and receivables online, so you always know the status of any customer’s account down to the penny.

The tremendous risk management capabilities factoring companies bring to the table make it easier for small businesses to plan and budget, freed of the constant worry about when and whether accounts receivables will be paid. Additionally, the working capital solutions provided by an invoice factoring facility-- near immediate access to funding on factor invoice -- allow small business owners to take advantages of early pay discounts offered by their own creditors, saving them even more money and allowing them to reduce or eliminate debt faster than ever before.

Next up: Choosing the factoring firm that’s right for your small business!

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