Invoice Factoring in Utah

Utah Invoice Factoring

When people think of states bustling with business activity they probably think of California, New York or Texas. Flying under the radar is Utah, named the Top State for Business by CNBC in 2016.1 Among the reasons cited for the honor include a business friendly regulatory environment, the cost of doing business and the state’s overall economy. Utah shined in all of these categories.

But the one area where the Beehive state ranked [relatively] low (24th) was in the ‘access to capital’ category.2 For larger businesses, this is more of an inconvenience but they have many funding options including traditional bank loans or capital markets.

But for smaller businesses, having immediate access to cash can mean the difference between success and failure. Paying an existing debt obligation on time, making payroll, or buying much-needed inventory are just a few common needs of small businesses.

When these events are unable to be met, the consequences can be punitive-including expensive late fees, decreased employee morale and the inability to meet new orders.

Newer, fast-growing businesses don’t always qualify for traditional financing from banks. A lack of operating history, financial statements, bottom line profitability, or adequate collateral are common roadblocks.

Consequently, many small businesses are often forced to sell valuable equity to raise capital. Others may be forced to pay extremely high interest rates from merchant cash advance companies.

An overlooked small business funding option is invoice factoring (also known as invoice financing). Factoring is the discounted selling of accounts receivables to a third-party, known as a ‘factor’. Factoring provides immediate cash which is crucial to many small businesses or startups. Even if a smaller business could get approved for a traditional bank loan or small business line of credit, the process would take weeks or even months. Utah invoice factoring is a much quicker alternative.

Traditional factoring companies can approve an initial application in just a few days. Some online factoring companies (such as Bluevine and Fundbox) can approve them even quicker. Once approved, funding can be as quickly as same day. This convenience often proves invaluable.

Major Industries in Utah

Utah’s business friendly regulations attracts businesses from a variety of different industries. Popular  Utah industries include technology, healthcare and transportation and manufacturing). Intermountain Healthcare is the  largest private employer in the state at over 20,000 professionals.3 Other popular Utah industries include:

  • Technology
  • Healthcare
  • Transportation & Logistics

While the startup scenes are normally associated with Silicon Valley or even New York’s Silicon Alley there’s another nickname is making the rounds, Silicon Slopes. A number of venture capital firms are flocking to Utah to join the upstart movement. But this doesn’t help the smaller companies who aren’t interested in offering equity in their company.

Invoice Factoring Companies in Utah

Larger factoring companies often have branches in a number of different states, but we believe it’s a good idea to use a factor headquartered in the same state as your business. This provides a degree of local expertise that is beneficial to any small business.

The factor may know a number of the account debtors and may already have a working relationship with them. For example, the factor’s credit and collection departments may be better than your own. There are a few of accounts receivable factoring companies headquartered in Utah:

You’ll notice that one of these factors is also an FDIC-insured banking institution. This hybrid approach (similar to Sea Coast Bank, Independent Bank or Green Bank) is gaining popularity as a solid capital base (coming from depositors) can provide capital for many small banks through alternative financing options such as accounts receivable factoring, invoice financing and asset based lending.

Though used interchangeably, invoice financing and factoring are different transactions. Invoice factoring involves the actual sale of the invoices (and the rights to collect the unpaid balances) to a third party. Because of this, it’s not a loan at all, it’s an asset sale. Many invoice factoring companies also allow their customers the option to pick and choose which invoices to factor on both recourse and non recourse factoring terms.

Other Invoice Factoring Considerations in Utah

Utah’s industrial bank charter system is something that attracting business for the Beehive state. For example, WebBank is a Utah Industrial Bank that helps finance Fundbox. Investment bank UBS has an Utah chartered bank to handle it’s auto lending activities.4 And Wex Inc. has the Wex industrial bank to help finance its transportation offerings. Social lender SoFi has recently applied for a charter.

And similar to Nevada and Delaware, the tax and regulatory friendly environment are benefits for many businesses that choose to incorporate there. This helps keep the state government in a solid fiscal position with corporate tax revenues and renewed filing fees.

If your business is interested in learning more about factoring receivables, tell us a little about your business (location, industry, size of your average monthly invoices, etc.) and we will match you with a factor from our network of invoice factoring companies in Utah. Don’t get stuck in a lengthy and expensive contract-get the right financier from the beginning-it will save money and hassle in the long run.