Invoice Factoring Arrangement can be a lifeline to Restaurant SupplierSince man has to eat, the restaurant business is one industry which is exempted from economic difficulties, right? On the contrary, the restaurant industry is a highly competitive sector where even the most established players can be toppled by up-and-coming companies. In this cut-throat sector, it is a common practice amongst restaurants to ask for credit terms from their suppliers. Thus a typical restaurant supplier will have to wait for weeks and even months to get paid by restaurants, which could affect a supplier’s liquidity.
Restaurant suppliers have no choice but to agree to a credit arrangement with their customers, or face the prospect of not having any client at all. So how do restaurant suppliers get the money they need for their day-to-day operations? Most of them avail of invoice factoring facility from factoring lenders.
How Factoring Helps Restaurant Suppliers
Restaurant suppliers need to be liquid in order to operate. Their managers or owners require cash to pay for raw food items, the costs of delivering the foods from the market to the restaurant, and the wage of their personnel. These operational expenses can drain the resources even of the most moneyed entrepreneur, especially if their clients pay up after two to three months. This is where a business invoice factoring comes in.
Entrepreneurs who operate a restaurant supplier business can exchange their invoices for money granted by a factoring lender. The factoring lender won’t look at the balance sheet of the small firm nor ask for any form of collateral. It will only evaluate the creditworthiness of the supplier’s clients. Once the lender approves the application, the supplier can get as much as 90% of the total amount of the invoices.
The money that the supplier receives from the factoring lender can be used by the entrepreneur for his business. It could be utilized to pay for the wages of his workers, or acquire another delivery truck to speed up the delivery of supplies to clients. The money may even be spent for office rental, or the construction of a new office location.
Aside from the instant cash that restaurant suppliers can derive from a factoring arrangement, there are other benefits of factoring that make this financing scheme appealing to small entrepreneurs. In a factoring scheme, restaurant suppliers will not be indebted to the lender. The latter will charge only a small fee once it collects payments from the restaurant suppliers’ clients. And unlike bank loans that require tons of paperwork, applying for a factoring facility will only need an application form and copies of the invoices.
With the help of lenders that grant factoring financing to restaurant suppliers, an entrepreneur engaged in the business of providing supplies to restaurants will not have to worry about money for his operational expenses. Lenders like NeeBo Capital are ready to advance the amount indicated in invoices of restaurant suppliers, allowing them to grow their businesses. NeeBo Capital offers competitive rates and facilitates fast approval of factoring application. Contact them now and take the first step to growing your business.
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General Articles about Accounts Receivable Financing and Factoring:
» 08/01/2012 Debt Financing or Off Balance Sheet Financing?
» 09/15/2011 What to know when selecting a Factoring Company