Companies in the commercial landscaping business usually have to offer commercial customers up to 60 days to pay for their services. On the other hand they need to pay employees, suppliers, rent, and other expenses on the regular basis. Basically, they have a situation where revenues are coming in slowly but expenses are going out quickly. If the landscaping company does not have the financial resources to manage this, it risks running into cash flow problems. And if those cash flow problems are not addressed properly, they can lead to a downward spiral.

One way to solve this problem is to factor your accounts receivable. Factoring is a form of financing that provides an advance for your slow paying accounts receivable from credit worthy customers. This reduces the financial stress of waiting for customers to pay, and provides the liquidity you need to operate your landscaping business. Invoice factoring works by partnering with a factoring company that handles the advances and settlements. Note that your customers still pay under regular schedule and they are not required to pay any sooner.

To qualify for factoring your company must have commercially credit worthy customers. This is critical because factoring companies view the credit worthiness of your customers as the main collateral for the transaction. However, this is not the only requirement. To qualify for factoring you must also meet these criteria:

1. You must invoice for delivered, completed, and accepted work
2. Your accounts receivable must not have any liens
3. Your company must be free of liens and judgments
4. Company owners must have a good reputation and experience in the industry

One of the advantages of invoice factoring over other business financing solutions is that the financing line is flexible. The line is usually designed to grow with your sales, as long as your customers have good commercial credit. This feature makes invoice factoring an ideal solution for growing commercial landscaping companies that have working capital issues that stem from slow paying customers.

One of the biggest challenges for a commercial landscaping company is dealing with slow paying customers. It’s common for commercial customers to request anywhere between 30 days to 60 days to pay an invoice. In the meantime, the commercial landscaping company is responsible for covering all the expenses of doing the work and waiting until payment. For many companies, waiting that long can be a problem since they have a number of current expenses that must be met,  such as payroll, supplies, equipment and others. One way to solve this problem is to accelerate your revenues using invoice factoring.

Factoring unlocks the money that is due to your company but is tied in slow paying invoices. It provides you with the funds you need to meet your current expenses and provides stability to your cash flow. It works by partnering with a factoring financing company that advances funds using your open invoices as collateral. Most factoring companies will initially advance about 80% of your outstanding invoices. Your company gets the remaining 20%, less any fees, once the end customers actually pays the invoices in full.

Factoring plans are more flexible than other forms of business financing. One of its advantages is that it lets you leverage the credit of your customers – since the factoring company uses their payment ability as its main collateral. Also, factoring plans don’t have limits like conventional loans. They can grow with your sales, as long as you are selling landscaping services to customers with solid credit. This makes invoice factoring an ideal solution for small and growing commercial landscaping companies.