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Why Invoice Invoice Factoring Financing is Better than Bank Overdraft Credit?

No matter how successful a business is, emergency situations and need for funds have always been an indispensable part of financing and invoice factoring financing has solved many of these situations.

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Why Invoice Invoice Factoring Financing is Better than Bank Overdraft Credit?

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  1. Why Invoice Invoice Factoring Financing is Better than Bank Overdraft Credit?

  2. No matter how successful a business is, emergency situations and need for funds have always been an indispensable part of financing and invoice factoring financing has solved many of these situations. Bank overdraft credit has been used by some businesses but the ramifications to one business is not preferred by most owners. But, this source of funds has its own limitations and can affect businesses badly in terms of credit and even prevent the business from obtaining credit. Accounts receivable financing has now become the most preferred source of funding working capital requirement and many businesses are growing with it. Traditional sources of funds like bank loans or bank overdraft have their own demerits and is one major reason for surging demands for sources like invoice factoring. Let’s check how invoice factoring financing is more competitive than bank overdrafts –

  3. Fear of Withdrawal The major drawback of bank overdrafts is, there lies always a fear of withdrawal of this service by bank lingering. Banks have the rights to withdraw this service to a particular business at short notice. While entering into an arrangement of invoice factoring businesses can decide the period they want funding, thus overruling the fear of withdrawal of service at short notice. Repayment The amount of money banks give out as overdrafts are to be repaid in a stipulated time. In case of overdrafts, businesses get funds against their receivables and do not have to repay this money back, thus no liabilities are added to books.

  4. Caps to amount of funds Bank overdrafts are always limited when it comes to the amount of funds that they lend. Again, banks have rights to change these limits at any given time, depending on history of balance sheet of the business. In case of factoring the amount of funding is tied to the sales of any business. As the sales grow, so do the limits to funds. Businesses have the freedom to choose the amount of receivables they want to be financed. Contrary to overdrafts, receivables factoring can accommodate the expanding capital needs of a business when it is growing.

  5. Professional invoice factoring companies like www.invoicefactoringus.com have been known for their reliable services across the US. One of the leading commercial lenders in the US, they are open to businesses across all major industries to fund their short-term capital requirements. With their easy terms and conditions and competitive costs, they have many satisfied clients.

  6. A realistic alternative to bank overdrafts, such as receivable invoice factoring is flexible financing source of cash flow to meet short-term funding requirements for any business. Picking the right service provider will not only safeguard the financial health of businesses, but provides a competitive advantage and opens the path for growth and expansion.

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