What Types of Factoring Services Are Available in Washington?
When we speak about types of factoring, other than spot-factoring or regular factoring, we are usually referring to the risk associated with the factoring agreement. There are two primary types of factoring arrangements offered to businesses in need of cash flow:
Recourse Factoring – With a recourse factoring agreement, the risk of your clients not paying their invoices ultimately falls on you. If your clients cannot pay their invoices, you will need to reimburse the factoring company the advance that was paid out to you (for the invoice in question) and handle the collections or any associated losses yourself. As this option places the risk with your company, it is usually the cheaper of the two factoring types.
Non-Recourse Factoring –The factoring company takes responsibility for the non-payment of invoices by debtors. If your clients cannot pay (due to bankruptcy or similar circumstances), the factoring company will accept the loss. This makes this option lower risk for your business, but it does have higher fees, and not all factoring companies will offer it.
Accounts Receivable Financing in Washington
Other than invoice factoring, there are a few other types of financing where you can use your accounts receivable (invoices) as collateral for an infusion of cash. One option is invoice financing, which is similar to factoring, but unlike factoring, this service is structured as a loan. So, instead of the financier assuming control of your invoices and back-office processes, the responsibility of collections remains with your business, and once your customers have paid you, you will need to repay the advance you received.
Another financing option to consider is asset-based lending. This involves a business using its assets, such as equipment, invoices, inventory, or property, as collateral to secure a loan. Asset-based lending is particularly useful for businesses with a lot of physical assets but that may not have a strong credit history. However, there is always the risk of losing your assets if you default on your payments.
If you own a Washington-based business, you may also be familiar with merchant cash advances (MCAs). This financing option gives you upfront cash in exchange for a percentage of your credit card sales. This financing option is ideal for businesses that rely heavily on credit card transactions, such as retail stores or restaurants.
Small Business Loans in Washington
The Washington State Department of Commerce offers several small business financing options to small businesses. There are small business grants, or you can try the Flex Fund and Small Business Credit Initiative. Another offering is Startup Wisdom, a guide containing 27 strategies entrepreneurs can use to access business capital, from the very traditional options to the distinctly non-traditional ones. Invoice factoring is an alternative to traditional types of funding and is ideal for a Washington State small business with trustworthy customers that require access to quick cash.
Washington Business Economy
Washington State has more than half a million businesses, but they are dedicating additional resources to key industries as they have the most potential to create economic wealth and job growth. These industries are aviation and aerospace; agriculture and food manufacturing; clean technology; creative economy; forest products; communication and information technology; life science and global health; maritime; military and defense; tourism. High-growth industries such as space, innovation cluster accelerators, and industrial symbiosis are also supported.
To function optimally, these industries require energy and transport. Washington State has the largest network of hydroelectric power plants in the nation resulting in low-cost energy. Its transportation network includes 75 ports, 139 airports, and 3,300 miles of roadways.
There is a factoring company ready to serve the small businesses supporting each of these Washington industries. Sell your customer invoices to one of the many Washington factoring companies waiting to partner with you.
Factoring companies in Washington:
Have you been researching factoring companies in Washington? Read through this Invoice Factoring Guide to learn more about invoice factoring and how to find the ideal factoring partner in Washington.
Alternatively, request a complimentary rate quote and the Invoice Factoring Guide (IFG) team will connect you with the best Washington factoring company for your needs!