Invoice Factoring for Cybersecurity Companies

Invoice factoring speeds up cash flow for cybersecurity companies that invoice clients on terms. The best cybersecurity factoring companies offer fast advances, charge competitive factoring fees, and provide cybersecurity factoring clients with transparent agreements and no hidden fees. Find out more about how the invoice factoring process works and what makes it an effective financing tool for cybersecurity agencies.

Why is invoice factoring a good cybersecurity financing tool?

Invoice factoring is a financing tool that can be used by many different types of B2B (business to business) organizations that deliver goods or services to a client and then invoice that client on terms (such as net 30). Like many other B2B service agencies, many cybersecurity companies provide one-time services and then invoice a client or provide ongoing services to clients on a retainer basis, which is also invoiced, usually monthly.

The terms extended to clients may range anywhere from invoices due on receipt to net 30, net 45, or even longer. Like other B2B companies that sell to clients on terms, this means the cybersecurity company is incurring upfront expenses for software, tools, travel, hiring, payroll, and other operational costs well in advance of receiving corresponding payments. For this reason, invoice factoring is a useful financing tool for cybersecurity companies.

When should cybersecurity companies factor invoices?

Invoice factoring speeds up organizational cash flow, but that’s not the only benefit it provides, and so there may be many instances where cybersecurity companies should choose to factor invoices occasionally, or even on a regular basis. Here are some of the reasons that may indicate the time is right to factor cybersecurity invoices:

Slow paying customers

More than half (57%) of all B2B customer payments to small and mid-sized businesses were paid late in 2020 (pymts.com). In addition to late customer payments, many cybersecurity companies may also be extending generous terms to their clients as a competitive advantage. If your company invoices clients on terms and waits more than a couple of weeks for payments, the benefits of factoring may more than offset the low factoring fee paid to get an immediate advance on customer invoices, instead of waiting for customers to pay.

Slow cash flow  

No matter the industry, cash flow is a critical factor for any business. Inadequate cash flow can make it hard for your business to meet payroll and operational expenses, much less take advantage of growth opportunities or cost savings, such as quick-pay or cash discounts offered by your suppliers.

Payroll shortages

There is no shortage of demand for cybersecurity services, including both professional and managed services. Grandview research estimates that the cybersecurity industry will grow 10.9% from 2021 to 2028. With the number of threats, hacks, malware, ransomware, and other attacks businesses experience ever-growing, cybersecurity professionals are and will be in high demand for the foreseeable future.

It’s not uncommon, especially for startup, seasonal, or fast-growing businesses to find they don’t have quite enough money to cover payroll. After all, hiring itself is an expensive process, with many thousands of dollars expended just to hire and screen employees. After that, businesses incur costs for onboarding and training, as well as expenses needed to get cybersecurity professionals working (travel costs, home or office set up costs, telephone, software, tools, etc.)

Invoice factoring done to cover payroll expenses is often referred to as payroll financing or payroll factoring. Payroll factoring is simply the process of factoring invoices to free up money to meet payroll expenses, including salaries as well as payroll taxes and benefit costs. It’s commonly used by staffing agencies, recruitment firms, and temporary employment agencies.

How does the cybersecurity factoring process work?

You can get a same or next day advance on factored invoices, which means you get access to the working capital tied up in unpaid customer receivables almost as soon as you generate an invoice. Having immediate access to money your firm has earned instead of waiting weeks or months to get paid speeds up organizational cash flow. Instead of chasing receivables you stay focused on running your business and growing it.

Here’s how the cybersecurity factoring process works:

1. Apply to factor invoices with Wave Crest Capital

2. Generate a customer invoice and factor it

3. Get an advance of up to 95% of the invoice within 1-2 business days (or even more), pay as little as 1% factoring fee

4. Day 30-45-60+ - receive any amount held in reserve after the customer has remitted payment for the factored invoice

What to look for in a cyber security invoice factoring company:

The fees, advances, and agreements offered by Cybersecurity factoring companies vary widely. Our goal is to be your trusted partner for the long term, and this is reflected in how we do business. As one of the best invoice factoring companies for cybersecurity industry firms, we provide:

·         Competitive fees and advances

·         A culture of “yes!” instead of finding reasons to say no

·         Transparent factoring agreements with no hidden fees

·         Fast funding on advances

·         Personalized attention with a high level of customer care

We have decades of factoring experience, including knowledge you can put to work to grow your business. Reach out today for a free, no-obligation quote for invoice factoring services by calling us at 949-415-6427 or applying online.