Are you looking for new ways to support business expansion? More opportunities are coming. The Canadian economy is expected to rebound this coming year, Deloitte predicts, and optimism is growing among small business owners, too.
On this page, we’ll explore factoring’s role in business expansion and specific ways your factoring company can be instrumental in your growth going forward.
How Factoring Fuels Business Growth
Invoice factoring offers unique benefits that set it apart from other types of funding and make it especially helpful when you’re trying to accelerate business growth.
- No Debt: Factoring unlocks cash tied up in your unpaid B2B invoices. The balance is cleared when your customer pays their invoice, so you have nothing to pay back.
- Fast Payouts: You can receive up to 95 percent of an invoice’s value the day you submit your invoice, unlike loans that can take weeks or months to deliver.
- Quick and Easy Approval: Most businesses qualify for factoring. It’s an option even for small businesses that aren’t yet strong enough to qualify for bank loans.
- Grows with You: The amount of cash you qualify for increases with your invoice size so that you can get greater advances as your company scales.
7 Ways Invoice Factoring Can Support Business Expansion
Now that we’ve covered some ways factoring is uniquely poised to help growing companies, let’s explore how you can use it to support business expansion.
1. Invest in Your Customer Experience to Boost Retention
If you want to grow your business, keeping customers longer is one of the best places to start. Businesses can boost profit by up to 95 percent by increasing customer retention by five percent, according to OutboundEngine.
Even minor improvements to your customer experience can increase retention and make it easier for your business to reach the next level. Consider applying your factoring cash to one or more of the following initiatives:
- Employee training
- Self-service channels for your customers
- Customer surveys, focus groups, or research
- Improved customer service
- Loyalty programs
2. Implement Customer and Partner Referral Programs
Referred customers have a 37 percent higher retention rate than their counterparts, according to Annex Cloud. Their research shows that referred clients have a 16 percent higher lifetime value than others, too. Consider developing referral programs to increase the number of referrals you receive and support business expansion even more.
One type of program to consider is the customer referral program. Many businesses offer a discount or reward to their current customers for sending them new customers. Referral partner programs are another type to consider. In these cases, you’ll network with businesses and professionals who share your target audience and can send you customers who are a good fit for what you do. Most referral programs offer monetary incentives to referral partners for each person they refer.
You can use your factoring cash to market your programs and ensure you can follow through with whichever incentive you decide to provide.
3. Reach New Audiences or Markets
Most businesses have untapped markets and audiences. For instance, if your marketing focuses primarily on your city or province, you may want to begin marketing in a neighbouring area.
With a bit of research, you may discover that the people you’ve identified as your current customers aren’t your only customers or that people in adjacent industries can benefit from what you have to offer.
In these cases, you can use your factoring advance for:
- Market research
- Focus groups and panels
- Improved customer tracking and analytics
- In-depth analysis of your digital marketing analytics
- Marketing campaigns
4. Expand Your Offerings
A simple way to boost small business growth is to expand your current offerings. For instance:
- Offer more variants of your current offerings
- Develop new products or services
- Add another location
5. Acquire a Competitor or Aligned Business
One of the fastest ways to expand your business is to acquire another company, such as a competitor or business with products or services that can help you improve your offerings.
If it’s a stretch to do this based on the value of your outstanding invoices, consider using invoice factoring to pay off debt and engage in other activities to improve your credit score. This can make it easier to qualify for a loan when you’re ready to expand through acquisition.
Some factoring companies offer other forms of funding, including asset-based lending and equipment leasing and financing, that may make it easier for you to level up without having to go through a bank.
6. Grow Your Team and Bring on Pros
At some point, you’ll need to start adding to your team to support business expansion. To start, this might include specialists such as business and marketing consultants who can identify more ways for your company to grow. It’s also a good idea to bring on professionals such as attorneys to ensure your business is protected and an accountant to free up more of your time and help you make more informed financial decisions. You can use your factoring cash to recruit, hire, and train team members as your business expands, too.
7. Outsource and Get Tailored Services
When you work with an invoice factoring company, you can outsource some of your back-office tasks, such as customer credit checks, invoicing, and collections, to them as well. Plus, some have special programs that make it easier to grow your business. For instance, freight factoring companies sometimes offer free load boards so you can secure more work and fuel advances to make accepting the next load easier.
Prepare for Business Expansion with a Free Factoring Quote
Whichever methods you select to expand your business, invoice factoring can provide you with the working capital to kickstart initiatives and scale. Request a free factoring quote to get started.