What is invoice factoring? Invoice Factoring is exactly what is commonly known as ‘invoice financing’ or ‘invoice factoring’. Invoice Factoring allows companies to sell their bills to another company which will buy the bills from them and pay the companies a discount on the purchase price, usually, up to 90% of the invoice value. The factoring company then becomes responsible for collecting the payments from the purchasers.
There are many benefits to online invoice factoring in New Zealand, the biggest one being that it enables you to get paid quickly. You can take payment from your clients at any time and from any location. The factoring companies only require small processing fees and very low risk of losing money if clients don’t get paid. Also the factoring companies only require a one time set up fee, no ongoing set up fees, and no maintenance fees, monthly subscription fees or handling costs, nothing! You can literally get paid by the invoice whenever it’s convenient for you, right from the comfort of your own home.
Another major benefit is that there is no need to maintain contacts with your clients. With invoice financing, you are only required to maintain an internet connection and a few basic details like your company name, address and contact numbers. Your clients can pay you directly. Your online invoice financing solution will have built in collection features where your clients can enter the dates when they made the payments, the amounts they made and the names of their account holders. Your online factoring companies will keep detailed records of all this. This is great for tax purposes, where you will be able to check your invoices to see what tax credits you are getting.
Another major advantage of invoice factoring is that you are able to invoice your clients from your office. This eliminates a lot of transportation and postage costs for you. Invoices can also be sent through bulk e-mail. This will enable you to stay on top of your client’s accounts. Your clients will not experience any more difficulties in making payments, as your records will show your clients how they have paid, which allows you to keep track of your invoices. You will also benefit from increased sales as your clients will receive the bills in the mail more quickly.
Many small businesses believe that invoice factoring will mean a huge drop in their current sales. The fact is that online invoice factoring in New Zealand services often offer sales to small businesses that were not previously receiving invoicing through the mail. This is because the service provider will collect the invoice and complete all the paper work for you, saving you time in completing this process. In addition to this, many times you can have the invoice factored within a few days, rather than waiting for weeks. This allows you to get back to business and focus on running your business while being paid by another party.
Invoice Factors may want to provide you with your own bank statements so you can monitor and view what invoices have been generated and cashed in. This is very beneficial because you will know exactly when new invoices have been generated by your online invoice factoring New Zealand company. Also, if you need to find out your receivables immediately, you will be able to access your bank statements through the online factoring company’s website, as well as via e-mail. Invoices are usually sent through the mail within three days. Through online invoice financing, your small business will only need to monitor the invoices sent to you, and if you receive any acceptances, you will be able to electronically cash these invoices for your business.
A working capital loan is another option that many online invoice factoring New Zealand companies offer to business owners. This loan may be provided to you in a low interest rate, or you may be required to pay a higher interest rate in order to secure a loan. If you are on a tight budget, you may need to consider your working capital options in light of your personal credit requirement, which may not be strong enough to obtain a working capital loan without seeking help from a professional. You may also want to discuss this matter with your lender.
Most online invoice factoring New Zealand programs allow you to purchase a specified amount of time to pay off your invoices, up to a maximum of ninety days. With this option, you can maintain cash flow throughout the year, and you can use this time to pay down your debts, save for retirement, pay off other investments, or build cash in an emergency situation. Your invoices will stop coming in due dates, and you will be free from worries about your bills stacking up. For most small businesses, this is the best solution for managing monthly invoicing needs.