Tennessee Invoice Factoring

Small businesses are essential to the Volunteer State and comprise the majority of companies there. Tennessee’s economy is powered by and an innovative workforce-receiving a strong pipeline from outstanding institutions of higher education (including the University of Tennessee, Memphis and Vanderbilt).

Consequently, we are seeing a growing sense of entrepreneurship staying in-state. Tennessee invoice factoring is set to rise.

While the overall climate for new businesses is accommodative (low taxes and business-friendly regulations) access to capital remains a challenge for many (even when overall credit conditions are loose).

Many don’t qualify for a bank loan and are forced to pursue alternative small business funding options. Instead of offering up equity in their company in exchange for investor capital, many are choosing asset based lending or invoice factoring in Tennessee.

Major Invoice Factoring Industries in Tennessee:

  • Transportation Distribution and Logistics
  • Automotive Manufacturing
  • Aerospace and Aviation
  • Healthcare

Transportation Distribution and Logistics

Because of it’s centralized location, the state of Tennessee is home to a number of transportation companies, 16,699 to be specific.1  All together, the companies in this industry employ almost 269,000 Tennesseans.2 Many of these are truckers.

The trucking industry accounts for According to an article on BizJournals, trucking is “the lifeblood of Tennessee’s economy”. In fact, over 91% of the communities in Tennessee rely exclusively on trucks to move their goods.3 And the industry shows no signs of slowing with an expected growth rate is over 10% for the next decade.4

But trucking companies know that waiting to collect payment on invoices from customers is an unfortunate part of the deal. Trucking companies are not paid until after the load has been delivered. In the meantime, there are expenses that need to be paid out immediately such as fuel, tolls and maintenance.

This cash flow crunch often leads to trucking companies having to turn down additional business or risk not paying drivers on time. Many turn to trucking factoring companies like Fleetone and OTR Capital for advanced funding.

Automotive Manufacturing

Move over Michigan, the southeast is gaining ground as a crucial hub for assembling and manufacturing automotive. Transportation equipment is actually the state’s largest export. Companies like Alcoa, Hankook, Bridgestone and Denso Manufacturing are all well-represented in the Volunteer State.

Other Invoice Factoring Businesses in Tennessee

We were shocked to see the extent to which entrepreneurs are choosing to operate their startups in Tennessee. Vanderbilt even provides grants to outstanding student–led startups. Many small business and entrepreneurial resources (as well as some success stories) can be found at the site “Launch Tennessee”.5

Unfortunately, if you don’t immediately receive a grant or investor capital, it can be a struggle obtaining business capital for businesses with less than a few years of operating experience. Many turn to invoice financing, where a factoring company will advance capital, typically around 80% of the face value of accounts receivable, which act as the collateral. This financing proves to be invaluable to some businesses who require near-immediate funding and want to avoid expensive merchant cash advances.

Invoice Factoring Companies in Tennessee

These industries lend themselves to credit sales and slow paying customers, some with terms well beyond net 30 (sometimes 120 days or more). As such, an increasing number of companies have decided to start factoring invoices to improve cash flow and profit margins.

Tennessee invoice factoring companies operate around the state, serving small businesses for years. They offer an alternative to traditional lending services. Some even offer non recourse factoring basis, which transfers the credit risk of the account debtor to the factoring company.

While this type of factoring is more expensive than traditional (or discount) factoring, it adds some peace of mind to many smaller businesses that may have an out sized risk of default from just one of two large receivables. Tennessee invoice factoring is sure to grow over the next decade. Here are some accounts receivable factoring companies with headquarters in Tennessee:

If your business was turned down for a bank loan due to a limited operating history or poor business credit, you might consider invoice financing. The FICO Small Business Scoring Service is a new business credit rating system that is gaining traction. So when it eventually comes time for your business to shop for a small business line of credit, it pays to know the methodology of the new parameters.6

Bad credit is not a problem when factoring receivables because the transaction is technically an asset sale. As such, your business incurs no new debt so your credit is not as issue. It is your customer’s credit that matters.