Building your Business Strategically with Factoring Tips for Small and Medium Sized Businesses
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Sailun Tires

When you run a business, unpaid and overdue invoices come with the territory.  This has been even more prevalent over the past two years as the pandemic has taken its toll.  Waiting on payment is one of the biggest challenges for small and medium-sized businesses.  It means you can’t pay expenses, you can’t reinvest in new opportunities, and therefore, you can’t grow your business.  You feel stuck.

This is why factoring has seen a resurgence as of late; it gives companies immediate access to their funds.  According to CEO Loren Shifrin, “once the restraint of receivables and payables is removed, you’re only limited by your ability to sell and that’s when the real potential is unlocked.”

Shifrin runs Revolution Capital, Canada’s number one Factoring company and the fastest growing in North America.  He’s loaned more than $3B to approximately 1,000 companies in the past year alone.

“Today, so many business owners and executives have figured out how to harness the value of factoring, which simply defined means you sell your receivables for immediate access to cash flow, without any restrictions that a traditional lender might impose,” said Shifrin.

Shifrin helped the staffing agency Arrow Group grow their annual revenue from $30M to $400M in just three years, making them one of the largest staffing agencies in the country.

Is Factoring right for you?

Factoring is ideal for small and medium sized companies with large payables and delayed receivables.  It’s also an ideal stepping stone for graduating to banks as it doesn’t require a lengthy approval process and gives companies immediate access to capital.  With factoring, you don’t have to float large amounts of cash and can focus on negotiating better rates, attracting more business, hiring, reinvesting in infrastructure, etc.

Choose your Factoring partner carefully

Not all factoring companies are created equal. Shifrin says “the best factoring companies are the ones who want to invest in a business because they understand that its growth is fundamentally tied to their own. This way, they are committed to a mutually beneficial partnership.”

Here are three things to consider when choosing a factoring partner:

  • Is the factoring company a registered member of the International Factoring Association? The IFA has a Code of Ethics that governs all of its members – it keeps them honest and accountable
  • Does the contract have a term and what does cancellation look like? A straightforward 14-day cancellation is standard, but complicated processes that try to lock you in indefinitely are not
  • What does the factoring company promote: low fees or high service? If you choose a partner based on the lowest fees, don’t expect high service will follow – what they pitch is what you get

By using factoring, businesses can unlock tomorrow’s profits today, allowing them to reinvest in the future of their business.

For more information, visit www.revinc.com

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