For businesses that are new and have not established themselves in New Zealand, invoice financing companies in Christchurch might be the best way to finance the purchases of inventory, office equipment, supplies and more. invoice factoring companies offer an instant alternative to traditional business loans that require a credit rating check. Invoice factoring companies are also known as invoice factoring finance companies. They are an excellent alternative to invoice loans, which traditionally require personal guarantors or other forms of security.
Small business factoring is an extremely useful way to access fast cash when starting new businesses or growing existing ones. invoice financing companies in Christchurch offer businesses instant access to fast cash through a cash advance facility that does not require a credit check. The money can be quickly applied to expenses and you can gain access to your needed funds without ever having to apply for another loan.
Invoice factoring can provide small businesses with a ready supply of cash when they need it most. Instead of waiting for a bank loan, invoice financing companies in Christchurch will provide small businesses with up to 30% instant working capital. In return, you will receive a lump sum payment of the current market value of your outstanding invoices, usually less than the interest rate on the loan. If you consider it, this is a very attractive option. There are few lending institutions that will instantly provide small businesses with working capital at a low interest rate.
One of the disadvantages of using invoice financing companies in Christchurch is the fact that you do need to hold the line of credit. This means you could incur substantial interest and fees. If you are not careful, you could end up with an outstanding invoice balance that becomes difficult to repay. Moreover, many businesses use their working capital funds to take advantage of other profit producing activities.
It is important to carefully review all of your options before choosing between invoice financing and other commercial finance options. Working with online lenders is a great way to save time and money. While you can probably find competitive rates from local, small business loans brokers, you may not get the best terms or best conditions. Invoice financing companies in Christchurch often provide some of the best rates and terms available, but they are tied to a lender who has its own set of criteria.
Another disadvantage of working with online factoring companies is the factoring company’s ability to collect the receivables for you. Some account receivables may not be worth as much as other invoices. With invoice financing, you may have to sell your business assets to repay the loan. If you are unable to sell your property, the factoring company may use the property as collateral.
The factoring companies’ ability to collect interest on delinquent accounts is also a drawback. Many business owners make the mistake of thinking that a factoring company will only charge them origination fees and non-recourse fees, but they actually may also collect other fees on delinquent accounts. In fact, these fees are calculated separately from the principal amount due, which makes the fees more expensive and since they are non-recourse, business owners end up paying for them when they do not receive the principal amount they borrowed. Business owners may also be required to pay non-recourse fees in order to service the debt with the factoring company.
Many business owners may be surprised to learn that invoice factoring companies do not provide any kind of grace period before they start charging them for the unpaid balance on invoices. Most often, they start charging late fees as soon as the company receives a referral. Businesses must be able to prove that they are capable of paying the debt within the given time period or the factoring company will continue to charge them until they meet their deadlines. This means that business owners have to understand their billing cycles and work within them in order to avoid the high fees charged by factoring businesses. They should also know that there is usually a limit on the number of late fee charges that a business can be forced to pay within a set grace period, which means that they should be prepared to face additional fees beyond the initial fee if they are unable to make payment on time.
With all these things to consider, contact Invoice Factors today!