These Industries Benefit the Most from Factoring

Non-recourse invoice factoring is a powerful tool for many businesses. Those that need better cash flow, more protection from the risk of bad debt, and general flexibility will appreciate the convenience of invoice factoring. However, there is a reason that factoring is more popular in certain industries. 

Some industries present unique challenges to businesses that factoring alleviates, which ultimately makes the business more competitive and stable. Here are four industries that benefit greatly from factoring:

1. Transportation

Trucking is all about time. You need to make your deliveries on time, but customers don’t always pay on time. Even when they do, the industry standard is payment 60 to 90 days after delivery. Afterall, whoever you deliver to needs to use the goods you deliver to run their business and then get money from their clients or customers to pay you, right?

It's this expectation that causes trucking companies to often suffer from a lack of liquidity, which in many cases can prevent them from expanding. Anyone in the trucking industry knows that there are many large, upfront costs to pay for, including staffing, regulations and fuel. Getting cash upfront from your invoice factoring company can help you meet your costs and invest in your expanding business at the same time.

2. Food Manufacturing

Food manufacturers often have large costs and large inventories. You may be worried about new labelling and container regulations, how to meet consumer demands for wellness-focused food, and much more. Selling the value of your invoices through invoice factoring can help you get the supplies you need to fulfill customer orders. In turn this allows you to take on more work, expand when you need to, and make bolder moves in ingredients and packaging. If you’re so inclined, the cash flow strength from invoice factoring can help you innovate, too.

3. Staffing

Digital tools like automation and artificial intelligence are the future of the staffing industry. You’re crunched for time and are tasked with handling large volumes of information while finding just the right talent prior to getting paid. You need capital to invest in the resources to automate, which will help you succeed. With invoice factoring, you get access to invoices upfront, and can use that money to run your business more efficiently.

4. SMEs

While not an industry per se, small and medium sized enterprises do have unique needs that invoice factoring can fulfill. For example, many SMEs cannot qualify for traditional sources of funding, such as loans from a bank. Instead of lending, you can sell the value of your invoicing and get the capital you need to invest in your business and its growth. Non-recourse factoring can also provide you with valuable protection from loss and bad debt, which in some cases can make or break an SME.

Whatever industry you operate within, talk to the team at J D Factors about the challenges you're facing. We work with many businesses within the transportation, food manufacturing and staffing industries as well as owners of SMEs who are looking for a customized financial solution like factoring.