Invoice Factoring in Michigan

Michigan Invoice Factoring

Michigan is a state like few others. Despite, the woes of some auto-related cities such as Flint and Detroit, Michigan has a wide variety of industries and a very innovative workforce to lean on.

The state is also home some of the top academic institutions in the country with the University of Michigan as well as Michigan State, providing a growing sense of entrepreneurship among their graduates.

One issue that plagues many startups and small businesses face is poor net working capital. New companies often don’t have the necessary financial documents (profit and loss statements) or operating history to qualify for lower cost financing. Many turn to expensive alternatives such as merchant cash advances (do NOT do this).

Instead of paying outrageous interest rates or coughing up equity ownership in their company, an increasing number are opting for other financing sources including accounts receivable factoring or invoice factoring. Michigan invoice factoring thrives in a tight credit environment.

Major Invoice Factoring Industries in Michigan:

  • Automotive Suppliers
  • Advanced Manufacturing
  • Trucking
  • Aerospace and Aviation

Automobile Industry

Detroit is world renowned for the manufacturing of automobiles. Given the industry’s cyclicality, the Motor City has certainly had its shares of ups and downs. Today, the U.S.  automotive industry has come back from the dead. General Motors has been given a lifeline and Ford has turned things around in a major way, driven in large part due to the continued success of its F-150 pickup trucks.

One way that the auto industry has been able to thrive is by putting itself first. This means that many of these car companies have had to ensure their solvency by any means necessary. Increasingly, they strategically pay their suppliers late, improving their own cash conversion cycles at their supplier’s expense.

This is potentially crippling for the thousands of companies that supply the auto industry. Often, smaller suppliers are forced to accept credit sales with payment terms of up to 90 days to be able to compete with larger suppliers.

Michigan Tourism

The beautiful shores of Lake Michigan and the pristine landscape of the Upper Peninsula have made Michigan a premier vacation destination for decades. Boating, golfing, hiking and a robust sports scene (college and professional) have given many a reason to visit this beautiful state.1 An aggressive advertising campaign by the state government has aimed at the outdoor spirit of many in far away markets as the southwest and deep south.

Tech startups are helping make recreation choices for visitors less overwhelming. Go Local is a tech startup founded by UM graduates that matches tourists with true locals, to get the best vacation experience possible.2

Other Invoice Factoring Businesses in Michigan

A little known fact outside the state is that Michigan has helped contribute to millions of Merry Christmas’ around the country. According to the University of Illinois, Michigan ranks third for the number of live Christmas trees grown.3 Michigan also grows the widest variety of Christmas trees than all other states in America.

Like other states that supply X-Mas trees, such as North Carolina, the trees are sent to by a number of trucking companies. These truckers often must wait for payment from the tree farms that purchase them at their destination, often the south.

Invoice Factoring Companies in Michigan

As such, there are a large number of companies that have decided to start factoring invoices to improve cash flow and profitability. To meet the cash flow needs of many of these companies, a number of invoice factoring companies, known as factors, have sprung up in the state, while others have been serving small businesses for decades. Below are some accounts receivable factoring companies with their headquarters in Michigan:

Some of these companies offer fixed rates as low as 1.5% on invoice factoring for the trucking industry (good for 90 days). You won’t find this with most factoring companies in Michigan or around the country. Others unite the capital resources of traditional banking with invoice factoring to service a wide array of commercial customers.

There are other factoring companies that have operations or contain smaller ‘offices’ around Michigan. These include Riviera Finance, Fleet One factoring, Bluevine and Fundbox. We typically, prefer a factoring company that are headquartered in the state since they understand the industry and are connected to resources that can serve their customers the best. These three companies are all headquartered in Michigan and are members of the industry’s main trade association, the IFA.

If your business doesn’t qualify for a bank loan or small business line of credit, consider factoring- the sale of outstanding invoices to a third party (the aptly-named invoice factoring company)at a discount to their face value.

Since this is an asset sale, your business will incur no additional debt from this method of small business funding. If the bond bubble ever bursts and interest rates start to shoot higher, invoice financing could become a preeminent source of capital for small businesses.