The Difference Between Invoice Factoring and Credit Cards
Insufficient funding is a constant battle for small businesses and agencies. Startup funding is difficult, if not almost impossible to get, because new or smaller businesses lack the collateral and credit history they need. Small and start-up businesses usually have two choices for funding: invoice factoring and small business credit cards.
Small Business Credit Card Pros
Business Credit Cards can have many benefits. For example, many lenders offer company discounts and rewards to those who use the cards. Businesses receive statements showing exactly how the money is being spent, as well as who is doing the spending. Credit cards lower the risk of fraud and make employees accountable for their expenditures.
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Cons of Small Business Credit Cards
• High annual fees
• Interest rates can change without notice
• Card not automatically protected under the CARD act
• Payment due dates can change from one month to the next
• Charges over credit limit incur high fees
• Dire consequences for late payments
• Some banks require card be paid in full each month in order to receive perks
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How Does Invoice Factoring Work?
Almost every business has accounts receivable, and almost every business has those customers that seem to take forever to pay. When you factor with EZ Invoice Factoring, you sell your invoices to us at a discount. We give you cash for them immediately and bill your customers at the terms you have already established. When they pay us in full, we release the discounted amount to you, minus a small percentage.
We do not require extensive paperwork or credit checks, because we base approval on the credit of your customers. It only takes 3 to 5 business days for approval and after that, approvals can take less than 24 hours.
There are no loans to repay and factoring does not appear as a negative on your balance sheet.
Benefits of Invoice Factoring:
- No credit check
- Flexible terms
- No debt
- Clear terms with no surprise or hidden fees
- 90% of invoice amounts generate cash right away
- Lowest industry rates average 1.59%
