The seafood business is a critical business to handle. This is because the business undergoes some distinct kind of pressure. Businesses need to get to market for their products as fast as possible or risk having no product. Therefore, such businesses need to avoid going into bankruptcy or stop business due to negative cash flow. For instance, even with the fast market, the payments will have to wait for around 30 to 60 days. Within these days, however, the business has to keep running smoothly. Bills have to be paid, payrolls have to be paid, and every other machine and equipment need to be operational. Therefore at this point, one may consider factoring for seafood industry. Seafood factoring involves a third party making a cash advance against an unpaid invoice. It frees up cash that has been burdened by an invoice that will not be paid for at least 30 days. Hence business can run smoothly; anglers can use their boats, bills, and payrolls are paid.
Here are some of the benefits of factoring for seafood.
- Reduces payment delays
Mostly, payments to seafood vendors and providers may take a month or two. This is a long time to ensure the business is running without any cash flow. Also, this kind of marketing has a limited shelf life, and still, hospitalities and grocery industries do not pay up on time. Therefore, To compensate the supplier, the store must make a sale of the product. Taking up to 60 days to return allows the store to maximize the product’s profit and make the best use of the funds. It’s a common practice in the seafood sector, which is why invoice factoring is so vital. Therefore, invoice factoring will ensure that you get the money sooner than later instead of waiting up for the month. This helps the business run smoothly and efficiently.
- It improves your businesses credit profile
This means that with financing from factors, one can pay off lenders and service providers. Thus, it creates a good profile on your business disclosing financial responsibility. Moreover, a good credit profile comes with its perks and advantages. For instance, it lowers the interest rates on loans hence lowering the cost of opportunity. Not only does invoice factoring help to reduce outstanding obligations like accounts payable, but it also helps the operator receive the cash he needs to make loan payments. On-time loan repayment establishes a strong credit record, making future capital access easier.
- It gives you time to tend to business
Factoring cuts you the time of spending your time trying to get payments from different people. This gives you the time to tend to your business needs and ensure your business runs smoothly. Therefore, Factoring eliminates the need to search for cash. Working on the boat and bringing in more fish to go to market instead of sitting in the office and keeping everything docked saves time and money.
- No line of credit limits
The value of a depreciable asset is not used to calculate an advance in invoice factoring. Rather, it gives funding based on the invoice’s outstanding value. While small costs accumulate while the invoice is open, they are comparable to a cash discount granted to the client and far less than interest charges.
In conclusion, invoice factoring is very beneficial to seafood businesses to help keep them afloat.