Invoice Factoring in New Mexico
New Mexico Invoice Factoring
Small business is vital to New Mexico’s economy. The approximately 152,000 registered small businesses employ nearly 332,000 people, or 55.5% of all state workers.1 They are especially important since not a single Fortune 500 company is located in The Land of Enchantment.2
Anyone that has ever operated a small business in New Mexico knows how difficult it can be in the tough economic times. According to Business Insider, New Mexico ranks fifth-worst in terms of GDP (Gross Domestic Product) and employment change since the Great Recession.3 This malaise strains the budgets of both the public and private sector.
When your customers get stretched thin financially, it’s your small business that waits for payment from credit sales. Your accounts receivable steadily rise as a percentage of revenues. When this happens, cash flow management becomes critical.
But it’s poor cash flow management that gets businesses into trouble. While many businesses enjoy up-front payment, most smaller companies must offer credit terms to larger accounts with many owners waiting 60 or 90 days for payment. Operating in certain industries like trucking, manufacturing, construction, and staffing present such challenges.
If your startup or small business needs fast funding, invoice factoring in New Mexico may be the solution to liquidity problems. Factoring receivables can provide the cash flow many small businesses need to make their payroll, meet other debt obligations or take on a new job. Accounts receivable financing can also reduce your cost of goods sold, by providing cash to take advantage of volume-based supplier discounts.
Invoice Factoring Companies in New Mexico
Most factors in the Southwest region are located in Texas, but there are plenty of invoice factoring companies in surrounding states like New Mexico, Arizona and Oklahoma. As a reminder, here’s how invoice factoring works. Your business sells the rights to collect on unpaid invoices to a third-party buyer.
In exchange, the factoring company can advance your business a percentage of the invoice’s face value, typically 80-90%. The advanced amount depends on many factors, mostly the credit of your clients (the account debtors). The factor has access to expert credit services so they have a pretty good idea of their ability to repay.
Once the customer pays the invoice, the factor returns the remaining balance less a factoring fee which can run between 1-4%. As you can see, factoring unlocks the net working capital tied up in accounts receivables, providing your business the quick cash it needs.
While we generally recommend invoice factoring companies headquartered in the same state as your small business, it’s more important that they specialize in your industry. Many industries require a level of knowledge and expertise to be effective.
Here are a couple invoice factoring companies in New Mexico:
- Applied Capital (Albuquerque)
- Interstate Capital (Santa Teresa)
- Riviera Finance
There are certainly more invoice factoring companies in New Mexico that can help your business with cash flow constraints. Some offer professional services including digital invoice processing, non recourse factoring , collection services and online factoring (Fundbox and Bluevine).
Traditional bank lending for small businesses and startups is spotty at best given the limited operating history and bad credit. Even if you can land a business loan or small business line of credit, the process can take weeks or months and require personal guarantees and other collateral. A good factoring partner can provide your business with immediate funding without all the paperwork and red tape.
With factoring, it’s not your business’ credit that is the issue; it’s the credit of your customers with the outstanding invoices that matters to a factoring company. And if general credit markets dry up due to an economic downturn, accounts receivable factoring should still be an option since it is technically an asset sale-no debt is incurred.
We believe in building a long term relationship with a factoring company. The more business you do (the more you factor), generally the lower the rates are. And over time, your small business may have access to different options to improve working capital such as asset based lending, revolvers and purchase order financing.
If you are interested in a free, no obligation quote from a factoring company in your industry, just provide us with some basic information about your business- such as the official company name, your typical invoice size (and average collection time) a description of your credit customers (schools, government agencies, large corporations, other small businesses, etc.) and whether the company has any federal tax liens. We would be honored to assist with your small business funding needs.
1https://www.sba.gov/sites/default/files/advocacy/New_Mexico.pdf
3http://www.businessinsider.com/the-states-that-are-still-reeling-from-the-great-recession-2017-8