Peaks & Valleys

One of the benefits of accounts receivable factoring is the ability to fund a company with uneven revenues. Many businesses, especially in extreme growth mode, tend to experience the feast and famine commonly known to affect small business. The problem for traditional lending is pegging a credit limit the will help during the feast periods but has to be respectful of historical famine periods. One month a company may bill $10,000 in invoices and the next month $100,000. How can the bank offer enough credit to handle the month with larger invoices? With invoice factoring there is no credit limit. As long as the invoices are with credit worthy customers and the work has been completed and accepted, the factoring company will continue to fund through the growth curve. Once beyond the initial steep growth spurt, the client can graduate from invoice factoring and move onto more traditional lending.