Need Capital? Invoice Factoring vs. Bank Credit Lines

The need for additional capital can arise quickly and for all sorts of reasons, including company growth, new equipment purchases, acquisition and merger activity, or simply an increased need for raw materials or inventory. Two popular methods of obtaining more capital are invoice factoring or bank credit lines. If you think that these methods offer the same advantages, think again. Many of our customers have learned the hard way that trying to pry loose business loans from a bank is a tough nut to crack and seldom a timely solution to your cash flow needs. We hear many not-so-nice descriptions of the way companies view their dealings with banks: “slow”, “unfriendly” and “demanding” come to mind.
It doesn’t have to be that way. Invoice factoring offers a slew of advantages over bank credit lines, including the following:

Convenience:

Securing invoice factoring from Alpha Capital is a pretty easy deal, as it requires only our one-page application vs the mountains of forms you’ll have to fill out at your bank. Your time is valuable, don’t waste it completing reams of unnecessary documentation.

Speed:

When you need capital, the last thing you want is to twist slowly in the wind as the bank makes up its mind. Underwriting for invoice factoring at Alpha Capital is normally completed in just one day. If you apply to your bank for a credit line, prepare to wait for weeks or months before getting a decision.

Access:

Banks are wrong-headed when it comes to evaluating your access to credit. They rely almost exclusively on your credit history and score. If you have a low score or have recently filed for bankruptcy, your chances of getting a bank loan are virtually nil. We have a better idea. Alpha Capital provides invoice factoring to clients who have good cash flow and a proven record of collecting payments from their customers. After all, it’s the ability of your customers to pay their bills that counts when it comes to invoice factoring. Your credit history, frankly just isn’t that important. The quality of your customer base is.

Limitations:

You are the best judge of how much capital your need. When you deal with Alpha Capital, there is no preset limit on the amount of capital available to you. Factoring grows as your business and invoices grow. More sales equate to more money available, and your credit line grows automatically with your business. Contrast this to the way banks operate: They look at your previous-year financials to establish a credit line. Looking at the past rather than the future limits your ability to grow your company and support the needs of your customer.

Balance Sheet:

There are many reasons it is advantageous to raise capital without adding debt to your balance sheet. For one thing, the more debt you have as a percentage of total capital, the less money a bank will lend you. You may also run into trouble securing new vendors or equity partners if your debt-to-equity ratio is too high. Factoring is not a loan, so it doesn’t appear as a liability on your books.

Alpha Capital is your best source of capital acquisition using invoice factoring. We will help you leverage your invoices into immediate cash, providing your business with a quick injection of capital.  Don’t let your company miss out on important business opportunities. Contact us today!