Commonly, invoices can be paid at the determined time without any larger effect on the business. There are some exceptions to this rule, especially as it pertains to much larger invoices. Some companies can be restricted by the lack of payment on an invoice. This stifles their ability to pursue future large orders and keep the company growing.
What can be done about it? Some companies have enforced instant payment on invoices, but that can diminish business. It is not a comfortable feeling knowing a company won’t act until they have every penny. Some clients may not be willing to go that far, and the lack of future invoicing and installment plans could take their business elsewhere. Customers handling large invoices can muster up a connection with a third party spot factor entity.
An Introduction to Spot Factoring
The answer around this troubling trap is spot factoring. Spot factoring works by giving room to fulfill current invoices. It works as follows. A company will sell a single invoice to a third party provider for a settled amount. The company with the original invoice is paid for the stated amount in the invoice so they can continue operations as needed. The third party has basically bought the terms for the invoice. When the client eventually pays for the invoice on a future date, the payment goes to the third party.
The Benefit of Quick Access
The benefit to this methodology is obvious. Companies can use invoice funds instantly. They can take on a big invoice, or two, without having to reduce business on another consecutive large invoice. There is no interruption on the development of a project if a company is able to use large invoice funds to fund it. With a company like J Count Startups, there is no slow approval period. Typically, an invoice can be provided for in 48 hours or less.
Small businesses can work around any and all large invoices. They can keep new projects in order and reduce the queue for development. If a spot factor provider is in play, the order turnaround time can be expedited by days or weeks.