Independent consultants who are just starting out can benefit from cash flow factoring services to maintain their business while waiting for receivables. Payment options for consultants aren’t as reliable as for regular employees. Not only are their rates calculated differently, but the time they receive their salaries also vary from project to project.
Consultants have the ability to set their own payment schemes with their clients. They can choose to charge by the hour, project, or day, depending on the agreed upon contract. Likewise, their clients have the option to pay them a percentage before work begins, at a lump sum when the project is completed or at a predetermined frequency throughout the engagement.
For consultants who only have three or four clients at a time, they may be hard pressed to maintain funding for their expenses. Projects may take anywhere from a week to a year to complete and waiting for receivables may cause the consultant to drown in bills and other expenditures. And because payment doesn’t come as frequently as every twice a month, freelance consultants may need to find other means of supporting their business.
Invoice factoring or receivables factoring can be the solution to a consultant’s cash flow problem. With this type of factoring, a consultant can sell his or her invoices for immediate cash. They can contact a factoring company and receive money for the receivables they have yet to claim from their clients. The factoring company then remits the balance from the client at the time the consultant is scheduled to receive it.
Hiring cash flow factoring experts can aid independent consultants stay afloat without having to take out a loan or miss important payment deadlines. With invoice factoring, they can continue to run their business without having to worry about chasing after clients for money.