The most precious asset that a security agency has is its employees. In order to keep these security guards happily employed, they need to be paid on a regular basis. The challenge comes in for the small business whose accounting practices do not lend themselves to a steady influx of cash. Clients tend to pay invoices within 30 to 45 days, but security guards need to be paid either weekly or biweekly. Invoice factoring offers the solution to this dilemma.
Security agency factoring of invoices is a relatively simple concept. It is basically an advance on accounts receivable to offset clients who are slow to pay invoices. The security guard company continues to deliver services and invoice clients as usual. The factoring service provides the company with an advance equivalent to 90 percent of the invoice amount. Clients pay the invoice amounts directly to the factoring company. The factoring service then provides the security company with the additional 10 percent of invoice due, minus a small financing fee.
Security factoring yields many benefits including money for small business when it is most needed. The business can then pay its security guards as regularly scheduled. There is no need to employ collectors to handle the task of getting payment from clients, because this item will be handled by the factoring service.
Most services offer financing rates as low as 1.5 percent and the amount financed can be adjusted to grow with the sales of the company. The security company will no longer need to spend time worrying whether it can meet payroll. Ninety percent of the invoice amount will be quickly paid to the company by the factoring service. The company will only need to wait for funding of the additional ten percent, minus the financing fee.
Invoice factoring services provide money for small business in the form of advances on slow paying invoices. This immediate funding allows a company specializing in security guard services to pay its employees on time. In a field where the company depends on the high level of protection provided by such professionals, factoring provides small business help.
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