Outstanding invoices can sometimes cause cash flow problems for small businesses. This can be remedied through a type of asset-based lending called invoice factoring, where outstanding invoices are sold at a discount to a third party, known as the factor. Unfortunately, many small businesses make mistakes when using invoice factoring. Luckily, we talked to the pros and identified invoice factoring mistakes to avoid.
The following are 15 of the most common invoice factoring mistakes to avoid:
Brendan Green, General Manager, Octet Finance
Art Omega, Senior Underwriter, BlueVine
Stephen Dinsmore, Senior Funding Manager, Sedulo Funding
Anne MacRae, Vice President of Business Development, Express Business Funding
Connor Cranford, Marketing Director, The Southern Bank Company
Thomas Geisel, Executive Vice President, Sterling National Bank
Scott Winicour, President, Gibraltar Business Capital
Kosei Okubo, CEO, Founders Guide
Evan Tarver, Finance Editor, Fit Small Business
If your small business regularly has outstanding invoices, this can result in working capital issues and cash flow gaps. Invoice factoring, which allows you to get paid now for outstanding invoices at a discount, may be a good solution. Whether you are new to invoice factoring or have been using it for quite some time, make sure to avoid the 15 common invoice factoring mistakes listed above.