Factoring has been aiding businesses for decades. It is a relatively simpler and faster way to get over the financial crunch. Companies choose to factor over other financial aids due to various reasons. With new developments and technology adaptations, Arizona factoring markets are witnessing recent changes. A booming economy and promising job market provide numerous industries to thrive and hence a healthy ground for factoring companies.
A Quick Brief About Factoring
Factoring is a cash-out method that uses invoices to provide instant capital. There are times when other financing ways do not work out. Some of the common causes of opting for factoring are as follows.
- Fast cash availability
- Growth
- Credit sources maxed out
- Delay in customer payments
- The time-consuming process of banks
Apart from the above reasons, a massive cause of turning towards factoring is due to the size of a business. Startups and small & medium-sized enterprises often require external finances to keep them afloat till they hit their break-even. While the necessary cash flow is frequently needed, the credit reputation is also not in its best shape. Hence, factoring is convenient for such businesses to get out of the grueling times.
Impact on Arizona Factoring Market
With large cities like Phoenix, it boasts of a flourishing economy and an ever-expanding job market. Arizona has many big businesses like Apollo group, U-haul international, US airways, and so on. Arizona attracts many students and professionals alike seeking a promising future. This gives way to SMEs and startups to expand further. In the last decade, factoring has witnessed a growth rate of 6% CAGR. However, certain factors impact the Arizona factoring markets with the introduction of new technologies.
Causes Of Impact
1. Blockchain
New technologies like blockchain have seeped deep into IT infrastructure at a rapid rate. The platform-based technologies allow invoice financing via the internet. Though this expands the factoring market, it promotes discounting and small funding companies to rise to capture market share. Factoring is offered with new products and offers that threaten the factoring industry.
2. Competition
With the rise in smaller funding agencies providing factoring services, the factoring industry faces challenges. New methods of funding such as crowdfunding and selective invoice factoring are opposed to traditional methods of factoring.
3. Economic growth
Growth in the economy is closely related to demand in factoring services. Like Arizona factoring markets propose a steady increase in the economy, there is a high chance of businesses reaching out to financial companies for factoring services.
Conclusion
Many times, maintaining sustainable liquidity is challenging for businesses. Factoring is one of the most sought options taken to cash out their invoices without incurring additional burdens. The factoring market in Arizona has seen steady growth in the past. Though new developments require factoring to modify itself from its traditional form, the growing economy will continue to keep factoring in demand. Banks are tightening their funds, and startups are on the rise. At such times, factoring can provide the necessary capital for businesses to survive.
