Invoice Factoring in Ohio
Ohio Invoice Factoring
Small businesses are very critical is to Ohio’s economy. In fact, the nearly one million small businesses in the Buckeye State employ over 2 million members of the population (46% of Ohio employees).1 Unfortunately, many small business owners have slower paying customers. Many small businesses cannot rely on customers paying in prescribed net 30 terms. In fact, many often wait 30/60/90 or even 180 days for payment.
For large, outstanding invoices, this makes running a business very difficult. This can affect their ability to meet payroll, repay debt obligations or capitalize on a business opportunity. Invoice financing provides funding (often same day) which is a much better option than waiting for your customers to pay. A U.S. Bank study revealed that 82% of business failures are due to poor cash management and understanding.2
To make matters worse, many small businesses have another problem- lack of access to outside capital. Receiving a small business line of credit from a local bank can be very difficult, especially for businesses with limited operating history or profitability. It can also take weeks or even months which are of little help if you’re experiencing a temporary cash crunch.
There are options such as merchant cash advances but they can have extremely high interest rates. A better solution is Ohio invoice factoring, the discounted sale of invoices to a third-party buyer. Invoice factoring is a popular small business funding option for many businesses in a variety of industries including the construction, staffing and distribution sectors.
Major Ohio industries include:
- Accommodation and Food Service
- Health Care
With its close proximity to the industry hub in Michigan, many smaller manufacturing businesses in Ohio (especially Northeast Ohio) provide parts and services for our automotive industry.
But as suppliers for the auto industry will attest, economic conditions can change when credit dries up in an economic crisis. A great part about accounts receivable factoring is that the transaction is an asset sale, not a loan. In other words, your business incurs no additional debt and has less reliance on the overall credit environment.
Another major driver of Ohio manufacturing is the home appliance giant, Whirlpool. Greenville, Ohio is one of the locations that produce Kitchen Aid mixers and blenders.3 But like the auto industry, the home appliance segment is very cyclical.
Invoice Factoring Companies in Ohio
Providing alternative funding options, a number of invoice factoring companies operate in the state of Ohio. These third parties buyers unlock the cash that’s tied up in your company’s outstanding B2B invoices, providing your business with the quick cash it needs. A factor advances funds based on a percentage of the invoice’s face value. Once your initial application has been approved, funding is typically same day when using a wire (an ACH transfer may take a couple more days, but is free).
The amount advanced is determined by a number of variables, mostly the credit worthiness of your business customers. A factoring company generally finances just business to business (B2B) receivables, but it’s possible to find some factors willing to handle B2C invoices.
We generally recommend invoice factoring companies headquartered in the same state as your business. Further, we prefer factors that specialize in your industry. There are so many nuances between industries that a ‘jack-of-all-trades’ factor is often a master of none.
An invoice factoring company may have better credit information than you do. This value-add can help you decide which customers to extend credit sales to. If the factor focuses on the same industry as your small business, they’re probably familiar with your delinquent business customers (known as account debtors) and have dealt with them previously.
Here are a few invoice financing companies with headquarters in Ohio:
- Northwest Capital (Toledo)
- Park National Bank (Columbus)
- PRN Funding (Beachwood)
- Chemical Bank (Cleveland)
- Northwest Savings Bank
This is not a full list of invoice factoring companies in Ohio. If your company is experiencing cash flow problems or negative net working capital, we may be able to help. A good alternative lender can partner with your business briefly (to get through a rough patch) or longer-term as your business matures. Over time, accounts receivable factoring can lead to cheaper financing options such as asset based lending.
If your business is interested in factoring invoices and would like a free, no obligation quote, just provide us some basic information- official company name, the average size of monthly accounts receivable (and their ages) and a list of some major customers. We are glad to help your small business reach its full potential.