The greatest challenge that many independent and growing cable installation companies face is determining how to finance their business. Most of these companies are usually started by entrepreneurs with in-depth industry experience but little capital. One of the main advantages for cable installers is that their clients (cable companies and large contractors) usually have goodwill and award large contracts. However, the downside of these contracts is that it often takes a month or more to pay invoices. This is when factoring for cable installation company comes into the picture. This article focuses on factoring for cable installers.
The problem: slow or inadequate cash flow
Most cable sealing, marketing, and installation companies encounter slow or inadequate cash flow issues. They need to pay their employees and keep up with other business expenses, including cable installation supplies. Companies can keep up with this demand with a financial reserve. However, most small and independent cable installers do not have sufficient reserves and depend on immediate payments from their clients to meet business expenses.
The solution: Factoring the invoices
It can be difficult for independent and small cable installation companies to receive their payments faster. Usually, such companies need to provide flexible credit terms to their clients who have established payment procedures. One effective way to remedy this situation is by considering factoring for cable installation company.
Factoring gets a cable installation company an immediate advance on its slow-paying invoices from its clients. Instead of waiting for a month or longer to get paid, cable installers get immediate funds to pay their employees, business expenses, and suppliers by factoring in their invoices. The factoring company holds the invoices of their clients’ companies as collateral for the transaction, which closes when clients of cable installation companies pay on their usual schedule.
How does factoring work?
The invoices of cable installers are financed through a simple transaction in which their receivables are purchased by a factoring company in two installments. The first installment generally covers around 80-90 percent of the total amount of an invoice, as this amount is transferred to the cable installer’s account on completion of installation work and issuance of an invoice to the cable company or contractor.
The fact that most cable installation companies bill their clients for completed work every one to two weeks makes financing the transaction much easier. Once the clients of the cable installation company pay the full amount of the invoice on schedule, the factoring company transfers the remaining 10-20 percent (after deducting its service fees) to the cable installer’s account to conclude the transaction.
Conclusion
Nowadays, almost every independent cable installer uses an invoice factoring service regularly to ensure that they have sufficient cash on hand to cover business expenses and payroll. Here the main concern is whether factoring for cable installation company is the right solution. It is the right solution for cable installers who can’t afford to wait up for long to get paid by their clients. In this case, invoice factoring can help with the cash flow problem by providing enough finance to expand and grow the business.
About The Author
Nicole Hinton
Nicole is a freelancer & passionate blogger. She has 4+ years of experience in digital marketing and specialize in content writing, content marketing and organic search engine optimization. She has worked with many brands from Canada as well as the USA. Currently, she manages content marketing team of freelancers and doing their business efficiently.
