Accumulating funds can be one of the biggest challenges a startup or any business can face. Among all the other financial options, invoice factoring can be considered as the most opted option by the business owners to overcome the cash issue. You can visit Affinda.com in this regard.
Factoring is a swift, easy, and less risky way to get the needed cash flow. Yes, there are specific basic rules that someone needs to abide by. But there is no brainer in that.
The thumb rules for factoring in Newfoundland are not anything outlandish. Most of the reputed factoring companies’ regulations and protocols are transparent enough. But still, newbies make some mistakes that can be fatal for their businesses in the future.
Let’s talk about the misconception that can create confusion and also make you doubt your financial aptitude.
Misconceptions about Invoice Factoring
1. It’s not an Affordable Option
People have misconceptions that invoice factoring is pricey. Due to this delusion, they end up opting for extensive and expensive processes like taking loans from the banks. But the reality is quite the opposite. Factors usually pay a small percentage after settling the debt. It is based on the receivable asset and a speedy process that does not involve a lot of upfront spending.
2. Startups can’t opt for it
Funding for starting a small size business is quite challenging to find. Myths like invoice factoring are the road for big companies, are discouraging startup owners even thinking about invoice factoring. But there are many invoice firms available at the current date that provides funds to small-sized companies.
3. Factoring engages in a long-term agreement
The factoring process starts with purchasing the invoices by the factoring company and disbursing the needed cash against those invoices. It is nothing like a debt-interest cycle that goes on for an extended time. Factoring in Newfoundland usually takes only 24 hours. The commitment period is very minimal and flexible. The business owners often choose invoice factoring companies that are flexible for commitments for taking funds benefits.
4. Factoring companies charge high fees
It is a myth that factoring companies charge giant fees for the application process. All the invoice factoring companies provide service for a very minimal fee in the initial stage of the process for further enrollment. Their fast and low charge process is one of the reasons that business persons always prefer these programs.
5. The Customer base will fall
One of the most illogical misconceptions about factoring invoices is that it will affect the customer base. There is not even a minimal chance for this to happen as customers are least bothered by the fact that the business company is choosing invoice factoring for their cash flow. Though the whole process is known to many common people, there is no way that the customers can even access whether the company is factoring their invoices.
6. Good credit rating is required
When a company chooses an invoice factoring company, the factoring company is only interested in its creditworthiness and not the company’s credit rating. So, if a company has not excellent ratings, they should not hesitate to take factoring as a benefit.
7. Factoring is a complicated process
Basically, it’s a very straightforward process that takes at most 24 hours with minimal formalities and paperwork. Business companies need to provide their invoice copies, and the factoring company will initiate funds to the business company. There is not at all any administrative string in the whole process.
8. Compromising with the accounts receivable
Many companies have a second thought when it comes to factor their invoices. It is their misconception that the factory company may use the accounts receivable as their strategy to put down the customer base of the business company. But many factoring companies offer to work in partnership so that there is enough transparency.
9. All factoring companies are the same
Companies have misconceptions that all factoring companies are the same in terms of flexibility and demand. Well, they are all not the same. Before making a point of view, it is advised to actually get into a conversation with several factoring companies for your account receivables.
Conclusion
Invoice factoring in Newfoundland has always been in the uplift in the business market of Newfoundland. These misconceptions are stopping many aspiring business startups from overcoming their financial needs. It is highly advised not to get influenced by myths and misconceptions. The business companies should do proper study and information of the factoring companies to get the best for their business.
About The Author
Michelle Joe
Michelle Joe is a blogger by choice. She loves to discover the world around her. She likes to share her discoveries, experiences, and express herself through her blogs. You can find her on twitter
