Who needs factoring

Vintage car on a tow truck


Factoring is a highly useful financial instrument which was once reserved for businesses on their last legs. Today, it is utilised by a wide array of companies. Factoring is one instrument that is renowned for supporting the growth cycle of new, small and rapidly expanding businesses. It leverages capital from unpaid invoices and involves outsourcing your sales ledger. In this article, we will cover a few examples of situations where factoring can help a business meet its objectives through the rapid availability of capital.


Businesses Experiencing Cash Flow Troubles

We all know that businesses experience cash flow troubles from time to time. In the auto repairs industry, the wait on insurance pay outs can be extensive and often comparative to throwing a spanner in the works. Nobody wants to wait months for the thousands of dollars they’re owed, particularly when that money could be put to use today for buying new parts and/or employing extra staff to meet the demands of customers today.

Factoring is a vital tool for unlocking this latent capital backed up in unpaid invoices. It can be extremely useful to be paid as soon as the repair work is finished and the invoice is issued rather than waiting days, weeks or months. Another helpful feature of factoring is that the factoring company will chase up payment from insurers and you can focus on doing the work.


Smash Repairers with Extensive Outlay Costs

All kinds of car parts can be highly specific, and when dealing with custom or vintage vehicles, parts can be extremely expensive. Jobs can easily stretch into the tens of thousands of dollars and these sorts of outlays can put significant strain on your working capital. Factoring and invoice discounting are financial instruments that can release money from unpaid invoices and help keep your working capital at functional levels so your business can take on big jobs and be paid promptly.


Companies with less than Ideal Financial Management

A major advantage of factoring over similar financial instruments like invoice discounting, is that you are passing your entire sales ledger onto a third-party to pursue payment and mange cash flow. This third-party has a clear vested interest in maintaining the profitability of your company through the ongoing fees they will receive from doing the work of factoring. This work they do includes chasing up insurers and other debtors to pay their invoices, so you can focus on the day to day operation of your business.


Talk to Working Capital Finance About Financial Instruments to Keep Your Business Afloat

Here at Working Capital Finance, we are industry leading providers of factoring services and invoice discounting. We only serve smash and auto repairers, panel shops, detailers and mechanics across Australia, and have a solid understanding of how these businesses operate. If you think these services may be appropriate for your auto repair business, please get in touch with one of our professionals today by calling 02 9968 2328 or contacting us online.


Please note: The content of this article should be considered informational and not construed or considered to be actual financial advice.