One of the differences between a line of credit and invoice factoring has to do with your time keeping up with the financing. When using a bank to borrow against your receivables, the institution will require a “borrowing certificate” either each time you ask for an advance or from time to time during the financing relationship. This means you must complete a form and certify it yourself regarding the true value of your company assets, which then must be approved by the lender. This could be a very simple task or a time waster depending on your situation.
With invoice factoring, you only need to submit a legitimate, verifiable invoice to receive your advance. The availability grows exponentially with the size and scope of the incoming invoices without having to prove the overall financial condition of the company.
Additionally, banks and asset based lenders will require quarterly audits, which you pay for, where a team of auditors come into your offices and audit your books. This is an important part of the lending process because it aligns what the lender thinks your company is worth with the reality of true numbers on paper.
Factoring does not require an in-house audit, so you can avoid the time and cost of producing one. So here again, factoring is a simple to use, easy to access type of financing for a growing business.