The industry for security guard services is rapidly expanding and is gaining popularity in the U.S. Not only has the growing number of new businesses led to an increase of the potential clientele for this industry, it is also becoming increasingly popular among corporate and government agencies who require this service on a regular basis. Thus, the market is significantly expanding, opening more growth opportunities for the security guard industry itself.
As a security guard business, taking advantage of these opportunities is a crucial key factor of success. However, you may find it hard to juggle managing your financial needs, facing the fierce competition and making sure you are able to invest in future opportunities. On top of long-term plans, you need to make sure jobs are fulfilled, invoices are generated and then comes the wait for clients to pay within the next 30, 60 or 90 days. You then find your company in a difficult situation where funds needed to cover immediate needs are unavailable since there are no collections coming in yet. This is a cycle you have to go through that when mismanaged, could lead to serious implications for your business.
This is where external funding comes in, not only to keep your business afloat but also to preserve a competitive position on the market. Traditionally, a bank loan is the first option that might cross your mind, but the current tight lending market will most likely leave you struggling even more.
Invoice factoring is another financing alternative that can provide you with funds necessary for the growth and success of your business. At businesscash.com, we are proud to have been funding security guard service companies for almost 15 years, helping these companies continue providing services to their clients without having to worry about cash inflow problems.
How to secure your business’ success with invoice factoring?
Are any of these scenarios familiar?
- Turning down security guard contracts because of cash inflow problems?
- Watching an opportunity pass you by because you lacked the needed funds?
Don’t let cash inflow issues stand in your way to success! Allow us to introduce invoice factoring to be your partner on your path to success.
Invoice Factoring, also referred to as AR Factoring or Accounts Receivable Factoring, is a type of debtor finance that provides you with funding based on your invoices. It is a financial transaction between a factoring company and your security guard business where we provide financing based on your business’ accounts receivables. In fact, factoring companies agree to buy your creditworthy accounts receivable at a discount. And the best part of all, it is NOT a loan.
The key to be considered for Factoring is that you must deliver the product or service to B2B OR B2G. Once the agreement regarding the number of invoices and the rates are set, your factoring company will provide your security guard business with an upfront payment based on the due amounts from your verified creditworthy invoices; up to 90% of their value (and all this can happen within 24 hours). Your customers will then be notified that on the respective due dates, the factor will receive the payments instead. Thus, after 30, 60 or 90 days, and in accordance with the initial terms and conditions of the invoices, the debt will be collected from your end customers and the remaining balance returned to your security guard business after subtracting the agreed receivables financing fees.
A more concrete example would be a situation wherein your Security Guard Business lacks the needed working capital to cover its costs and fulfill its immediate financial needs. You contact a factoring company and offer to sell a number of your creditworthy invoices worth $100,000 due in 60 days. The factoring company agrees to buy them for 90% of their value, meaning $90,000. In accordance with the original terms of the invoices, the factoring company will collect the money after 60 days and return the remaining balance to your Security Guard Business minus the receivables financing service fees.
What are the benefits of Invoice Factoring/ Receivables Financing?
Security guard staffing factoring is more than a funding option that boosts your cash inflow. In fact, when you choose invoice factoring, you get to enjoy significant benefits that give you a considerable competitive edge in the security guard staffing industry. These benefits include:
Unlimited funding potential:
Your factoring credit line grows along with your sales cycle. You won’t ever have to worry again about how you can finance a new contract or purchase supplies because, with factoring, you will always have funding.
Qualify with imperfect credit:
Security guard factoring will offer you the necessary cash for your working capital to cover your daily activities and at the same time, ensure that your business will continue to grow. Approval is also based on the credit score of your customers. This means that not only will your own credit line not affect the approval of your funding application, factoring your invoices can also help you establish or rebuild your own credit rating. (Please confirm if this revised line still has the correct meaning)
Suppliers are willing to offer you discounts with the condition that you agree to shorter payment terms. With security guard factoring, you will have enough cash flow to take advantage of these discounts which not only reduces your costs but improves your profit margins as well. You can also qualify for more discounts when you are able to purchase a higher volume of items in a single transaction.
Comfort with government contracts
At BusinessCash, we have the experience in funding both the industry and the government contracts. We can help your security guard staffing business remain compliant with the rules and enable you to provide a staff for your largest clients.
Therefore, AR financing allows your staffing agency to not only manage its cash inflow and daily activities but also to invest in growth opportunities. With invoice factoring/receivables financing, you can meet your expenses, avoid penalties from delayed payments, grow your business, take on new customers and expand the industries you are currently serving. To sum up, the benefits of invoice factoring are:
- Up to 90% upfront payment;
- Start-ups and small companies are welcomed;
- Same day funding as you can receive funds as in as little as 24 hours;
- Leverage your accounts receivables;
- Fast access to cash and continuous working capital;
- Flexible negotiable terms;
- Reasonable service fees;
- Professional receivable management and industry experience;
- Based on your clients’ creditworthiness, not your own credit line;
- Provides back-office support;
- Factoring is not a loan, meaning less debt on your balance sheet;
- Funding grows as your receivables grow.