Running a security guard service is a very good business opportunity, but it does have its challenges. One of the biggest is the need to make weekly payroll for your employees while your customers may only pay monthly or on longer terms. This can lead to cash flow problems, a common issue that can be corrected with factoring for security guard companies.

Factoring for security guard companies is not new. Factoring is actually a very established way for a business to receive funding based on work they have already done and are waiting for payment from creditworthy customers.

Why Use Factoring?

Even though this is a very common practice, many business owners don’t understand the benefits of factoring, particularly if they have only previously considered bank loans.

Factoring has several benefits over bank loans because:

  • The business credit score is not used for approval of an application.
  • There are no limits on the amount you factor; it is based on the value of the accounts receivables you choose to sell to the company offering factoring for security guard companies.
  • You never make payments as this is not a loan. This means no repayments and no interest to have to calculate into your future budget.
  • Approval within 24 hours from the time of application and the cash wired to your business account within a few days.
  • The company offering factoring for security guard companies will provide full management of the accounts receivables they buy. This means managing collections, preparing reports and doing due diligence on your customers all as part of the services offered based on the rates charged.

What is Involved in Factoring?

As mentioned above, factoring for security guard companies is really just selling accounts receivable to a factor. The factor will pay a percentage of the value, up to 80% initially, and hold a 20% reserve. Once your customers pay their invoices, the factor deducts their charges from the reserve and forwards the balance to your business account.

When choosing factoring for security guard companies, you can ensure that all your employees are paid on time, allowing you to retain top security professionals. Additionally you can reduce your accounts receivable department, helping to further save operational costs. With the cash on hand, you can recruit new employees, take on new contracts and even earn discounts from your equipment suppliers through early payment, all helping your business to jump at the opportunity to grow.

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