Private Investigation Firms Grow with the Assistance of Factoring CompaniesThe private investigation business may not be considered as a sunrise industry, but it will always have its clients. Lawyers handling criminal or civil cases as well as insurance companies are among those who need the services of private investigation firms. However, the problem with the private investigation services is that clients will only pay once the private investigator has completed his work. This can pose cash flow woes to a private investigation company which has to pay for the wages of its investigators, office rent, and other daily expenses.
Applying for a bank loan is absolutely out of the equation for a private investigation company. For one, banks have tons of requirements for loan processing ranging from balance sheet to articles of incorporation and the like. Most private investigators won’t be able to produce these documents. Additionally, they would be hard-pressed to come up with collateral for their loan. Private investigators, however, can turn to factoring companies for their funding needs.
How Factoring Lenders Assess Private Investigators
Factoring companies won’t look at the balance sheet of private investigators. They will not scrutinize the records of these small firms and analyze whether the company will make money in the future. Factoring firms are only interested in one thing—the invoices of private investigation enterprises—and this will be their basis on granting a factoring facility. Private investigation companies with invoices from creditworthy clients have a great shot at getting as much as 90%of the total face value of their invoices.
Factoring lenders will advance the money in favor of the private investigation firms, which in turn can use the cash for its day-to-day expenses. Daily expenses range from wages of personnel, travel costs, accommodations, amongst others.
Wily owners or managers of private investigation companies can also use the money for other purposes. These include the purchase of vehicles that will make it easier for the investigators to get from one point to another. Pieces of equipment like modern gadgets that will aid the investigators may also be procured using the money received from a financing arrangement.
Factoring facility has numerous advantages over traditional sources of funding like bank loans. The most obvious advantage is the speed by which factoring lenders approve applications. Compared to bank loans that can take months to be processed, a factoring financing can be processed in a day or two. The money is released the following working day after approval.
Small firms availing of factoring facility will not have to pay off interest for the money they received. Instead, the factoring lender will only collect a small percentage which will be deducted once the client of the private investigator pays. Likewise, the private investigator company will no longer have to worry about collecting payments from their clients as the factoring lender could assume this responsibility.
Private investigation firms have a better chance at growing once they apply for invoice factoring. When it comes to business invoice factoring, NeeBo Capital is one of the most trusted names. Contact NeeBo Capital now to learn more about its competitive rates and fast factoring processing and approval.
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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