Most auto glass installers are small or medium-sized companies who spend most of their day repairing auto glass and then billing insurance companies or insurance claim intermediaries (e.g., Lynx Services or SGC Network) for the work. Although the industry is profitable, it is highly competitive. Many auto glass installers operate on very tight cash flows.
Glass suppliers and other expenses
On one hand, you have to buy auto glass supplies from vendors. Unless your auto glass repair company has been in business for a while, your vendors ask you to prepay for supplies. At best, some vendors may let you pay invoices in 10 days. Likewise, you also have other recurring expenses such as office rent, telephones, and payroll.
Consequently, your company needs to have cash on hand to cover these expenses.
Slow insurance payments
On the other hand, the insurance claims that you submit for reimbursement often pay in 45 or even 60 days. You can’t do much about this delay, as insurance companies pay invoices slowly and don’t provide alternatives.
The problem: quick expenses and slow revenues
Your auto glass business has a simple problem: expenses need to be paid quickly, but the corresponding revenues from insurance claims come in slowly. Unless you have a cash reserve, you could experience a cash flow shortage. This notion can be deceiving to some because profitable companies that are “doing well” can actually have cash flow problems, and these problems tend to hit companies when they are growing quickly.
You can solve this problem by factoring invoices
One way to fix this problem is to accelerate your revenues due from insurance claims by factoring invoices. With invoice factoring, a receivables factoring company provides financing that can be used immediately to pay auto glass vendors and other important expenses to operate your company. The transaction concludes once your insurance clients pay the claim.
Handling small claims
Many larger factoring companies are not comfortable handling a substantial number of small claims due to the work required to process them. Processing claims gets complicated if the factor verifies all invoices. Ask about this issue as you go through the process of finding the best factoring company to finance your business. Make sure you work with someone who is comfortable with the auto glass industry.
Most invoice factoring programs have easy qualification criteria compared to conventional bank lenders. To qualify, your auto glass installation and repair company should:
- Work only with insurance companies that have good commercial credit
- Have auto glass industry experience
- Have good billing procedures
- Not have tax liens
Should you work with a factoring company?
Factoring companies can help you improve your cash flow and position you for growth. When used correctly, invoice factoring allows you to offer terms to insurance clients without having to worry about slow payments. As a result, invoice factoring can be a great solution for auto installers who have cash flow problems due to slow-paying insurance claims.
Get more information
We can provide you with a competitive factoring quote. We offer high advances at low rates. For more information, please call (877) 300 3258.