How Invoice Finance Can Help Small Businesses Grow
Invoice finance is another name for debt or invoice factoring. It is a way to turn outstanding invoices into cash to help the company meet its financial goals. Often times, it is utilized as a cash flow management tool. But many of our customers look to invoice finance as a way to fuel business growth.
Growth is a normal part of running a business. Unfortunately, growth frequently requires cash that may be hard to come by due to how a company’s receivables are set up. As long as those receivables are there, invoice finance can be a very effective tool.
Financing Growth in Chicago
So how can invoice finance help small businesses grow? The best way to explain it is to use a real-life example. For that, we turn to a rather unique enterprise located in Chicago. According to a story on the Chicago Daily Herald website, a company known as L3DFX has been utilizing invoice factoring for the last five years.
L3DFX is a very interesting company by any measure. They design and build interactive experiences, theming elements, themed structures, and even immersive environments for theme parks, entertainment venues, and more. There aren’t many businesses in the U.S. that do this sort of thing.
Years ago, when the company was hoping to expand, their primary lender decided that lending was too risky. The business was too unique. So was its invoicing. The company didn’t have enough of a credit history to satisfy the lender. So L3DFX eventually turned to invoice factoring.
Taking on New Projects
One of the big issues with company growth is having the capital take on new projects. Like any company, L3DFX had to spend money in order to make it. Invoice factoring provided the cash they needed to invest in new projects, projects that eventually returned strong revenues.
Without those new projects, the company would not have been able to hire the additional staff they needed to grow. Hiring was another area in which invoice factoring was able to contribute. The company was able to raise cash in order to expand the payroll so new hires could contribute to the additional projects.
Cash Always Fuels Growth
Invoice finance can do for your business what it did for L3DFX. It all boils down to the fact that cash always fuels growth. Your company cannot expand its footprint without spending. You cannot serve more customers, do more marketing, or expand your physical footprint without the financial resources.
Granted, you can set aside a certain portion of the receivables in savings until you can pay for expansion with cash. And yes, saving is always a good idea. But the business world moves at a fast pace. Waiting until you can save enough cash may mean watching one opportunity after another pass you by. Unfortunately, wasted opportunities can stunt business growth considerably.
Fast, Easy, and On-Demand
Had L3DFX’s primary lender given them the loans they were after would the company still have sought out invoice finance? Perhaps. Had they not, they would have missed out on three of the biggest benefits of one of the world’s oldest lending models:
- Invoice financing is fast
- Invoice financing is easy
- Invoice financing is available on-demand.
Small business growth often requires a level of flexibility that more traditional financing options just do not offer. Those other options all have their place and time. They all help support business growth to one degree or another. But there are times when invoice finance is the best way to go. It can help fuel company growth by providing fast access to much-needed cash.