Running a contracting business can be challenging, particularly when clients are slow to pay. While allowing a certain amount of leeway tends to be almost necessary, it can also make coming up with money to pay bills much more difficult. Chasing after clients who have allowed themselves to fall into default might not be pleasant, but it will sometimes be necessary. Even with those customers who still have time to pay according to the agreed-upon terms, however, there are effective ways of turning receivables into cash.
The most direct and common way of doing so is to make use of a service known as factoring. Under this arrangement, a specialist known as a factor agrees to either take over the right to collect on a particular invoice or at least accept this as collateral on a loan. While there are many different varieties of factoring that are commonly employed today, some tend to make more sense for contractors and other small businesses.
As additional info here will make clear, most companies at this scale find that spot factoring arrangements will suit their needs the best. Larger businesses that can expect to be generating many invoices each month will often enter into relatively long-term, binding relationships with factors, and these will generally help keep the fees charged low. On the other hand, contractors tend to find themselves wanting more to have only an occasional invoice factored, with the usual means of collecting on them being used otherwise.
Fortunately, there are quite a few factors today who are happy to work under such terms. All that it will normally take to acquire cash from such a service will be to present an invoice, especially one whose holder has a history of doing business that can easily be verified. With this simple condition met, the factor will then normally offer a certain amount of cash for the invoice or account up front.
Instead of needing to hope that a given client will pay up before the terms of the invoice require, this can, therefore, mean being able to put that cash to use immediately. Understandably enough, a great many contractors who discover and become familiar with this option end up finding it be a valuable one.