How Janitorial Companies Can Use Factoring

Janitorial services rely on many workers putting in multiple hours to keep offices and apartment complexes clean and well maintained. The companies that employ them are constantly pushed to come up with the weekly payroll and working capital for this labor-intensive field.

Cash shortages can spell disaster for a small to medium size janitorial business. How can they make payroll? Without payroll, how can they keep workers? Many companies use janitorial factoring as a way to come up with needed cash.

The Benefits of Janitorial Factoring

Janitorial factoring has been around for many years. It is a reliable, ethical and respected method of finding working capital for a janitorial business.

A factoring company buys the accounts receivable from the janitorial company for a specific amount of dollars. This helps the business bridge a gap in working capital, while they continue to service their accounts without interruption. At the same time, the owner gets an immediate infusion of cash.

The factor settles the accounts as they come due. The funds that the janitorial company receives do not have to be repaid, because this is not a loan. They also can use the money any way they see fit, without restriction.

The owner isn’t at the mercy of clients who are slow payers. The factoring company deals with the headaches involved in collecting the amount due on the invoices. This is a big advantage if a business currently has one or more delinquent accounts.

It’s Not a Loan

A company that is falling behind often seeks loans wherever they can find them. But if they fall further behind with payments on the loans, they end up with late fees, adding to their debt burden. With factoring, they are not incurring more debt.

With janitorial factoring, the money helps with cash flow management, without the burden of debt. Employees are paid on time and clients get their offices cleaned according to schedule.

Because factoring isn’t a loan, a janitorial business doesn’t need a perfect credit score to qualify. A janitorial factoring business will take more risks than a bank or other lender.