Buying Back Your Time: How Factoring Can Help Save You Money
Business owners know that time is money. In many cases, the person who owns the business is also doing a bulk of the associated work. From writing reports to back-office paperwork, these smaller tasks can take up a huge amount of time, and the longer these tasks take, the more revenue loss you may experience.
Whether you’re wearing a lot of hats and hope to remove a few of them or are looking for an easier way to grow your business, buying back your time provides a net benefit to your life.
The case for outsourcing
No matter the size of your business, there’s a compelling case to be made for outsourcing certain tasks. From lack of available manpower to inadequate knowledge, many business owners find it difficult to manage it all with a small staff. Outsourcing allows you to hire experts to perform certain functions within your company instead of having someone without the right industry knowledge complete the task.
What is your time worth?
Determining how much your personal time is worth can be a difficult undertaking. If you use your hourly rate to determine your worth, it gets complicated when you begin evaluating things like the availability of your time, or the ratio of time you spend working versus the time you are able to spend on leisure activities. And what counts as work? How do you differentiate the value of time spent doing an appraisal versus following up on invoices?
Buying back your time requires determining the value of your time. Consider doing a little bit of calculating.
A little bit of math
For the sake of easy math, let’s assume that your hourly rate is $50.Let’s also assume that you spend roughly two hours per week tracking down unpaid invoices. Taking into account your hourly rate, you’ve lost $100 trying to get paid and you probably dealt with a lot of missed calls, promises to pay later, and few (if any) payments made on the spot.
Is this a good use of your time? Probably not, especially if it happens week after week.
When and what you should outsource
Certain tasks are easier to outsource than others, so think carefully about the kind of help you need. For many, easily outsourced tasks fall into a few categories:
- Highly specialized tasks. Unlike data entry, specialized tasks require an intricate knowledge of something, although it might not be the specifics of the business. Legal matters are often best outsourced because it wouldn’t make sense to employ a full-time lawyer for infrequent tasks or an accountant that only helps during tax season. Using consultants to fill the gaps in your business makes sense. By leveraging their expertise, you accomplish tasks with more correctness and efficiency.
- Strategy and leadership. For some companies, it makes a lot of sense to hire consultants to provide insight on higher-level things like marketing plans or company vision. If you’re a smaller or newer business, this kind of outsourced expertise can be a helpful way to get the best strategy for your company to move forward.
- Things that are repetitive. Data entry isn’t necessarily difficult, but it is repetitive and it takes some time. Accounts payable and shipping also fall into this category and require little transfer of knowledge to transition to an outside individual or company. Because these tasks are easily accomplished by people who aren’t familiar with the ins and outs of the company and don’t require specialized knowledge, they’re a perfect place to offload some of your work for a low fee, ultimately saving you money.
Collecting unpaid invoices is the perfect task to outsource because it doesn’t require extensive knowledge, isn’t particularly enjoyable, takes a fair amount of time, and happens with regularity. Unpaid invoices also present a financial hurdle for most businesses, so finding a way to get cash in hand quickly is essential.
Outsourcing in the Appraisal Business
Although the reasons for outsourcing in the appraisal business overlap with the decision to outsource in any industry, there are some nuances that you may want to consider. We’ve talked generally about why outsourcing makes sense for business owners, but why is it a particularly good option in the appraisal business?
- Technical knowledge. For many appraisers, technology can act as a hurdle to the actual work of appraising. Software can be complicated, and if you’re not someone who is technically savvy, it can be frustrating. Learning tools takes time, so tasks that require this sort of knowledge are great choices for outsourcing.
- Availability of resources. Appraisers often work with a small staff, so you’ll want to carefully consider what tasks you actually have the resources to handle. By working with a factoring company like Sekady, you can take the arduous process of collecting money for invoices and spend your time where it matters.
- Desire or need to grow. Because growth requires manpower and capital, outsourcing invoicing in the appraisal business makes a lot of sense. With cash in hand, your time is open to other business needs.
- Cost. If you’re slow at data entry or can’t justify hiring someone who isn’t, this becomes a costly endeavor. You may not have enough steady work to employ someone full-time, and it can be difficult to find someone willing and able to handle these tasks for a more limited employment duration. Easily solve this problem by outsourcing where it makes sense, resulting in a ton of cost savings for you. Best of all, if someone leaves a position at the company taking care of your invoices, they handle the transition. No training, hiring or waiting for the right candidate.
A better way
Now imagine that, on average, your invoices amount to about $100. Ideally, you get paid and move along. But when they don’t, envision a future in which you get your money now, for only a small 5% fee. You could have the money in hand as soon as that same business day on approved invoices, simplifying your life and leaving you free to do what you do best.
Outsourcing this one task can free you up to do at least one extra job every single week. In the course of a year, this is no small amount of money. Factoring pays for itself while growing your business and saving you from doing some of the more unpleasant tasks associated with business ownership. This simple solution can position you for the type of growth you’re trying to achieve, or help you maintain the status quo–but with more cash in your pocket.
How it works
Partnering with a company to factor your invoices saves time and money while leaving the difficult and sometimes awkward task of collecting cash to the professionals. Meanwhile, you’re free to complete your highly specialized work, which will more than cover the small fee associated with factoring.
If you’re unfamiliar with factoring, think of it as simply selling your invoices. A factoring company will purchase unpaid invoices, charge a small fee, pay you for the invoices, and do the work of collecting payment –but you’ll already have money in hand.
What will you do with your extra time? The sky’s the limit! Use your extra hours to more efficiently make money for your business in any way that you choose.
Many reasons to factor
While factoring saves a lot of time, there are many more great reasons to give it a try. If your business is poised for growth, enduring tough economic times, or undergoing some type of costly emergency, you may need cash flow available to you quickly. When you factor your invoices, you can get cash the next business day for a small fee. There is no interest taken out, and you can spend the time earning money in other ways, avoiding debt, and fulfilling your financial obligations. Unlike taking out a loan, your credit history won’t render you ineligible to work with, allowing you easy access to cash.
Factoring provides a lot of flexibility, especially if you work with the right company. You may want to handle some invoices yourself (to preserve relationships, because you know they’re easy, etc.) and factor others, which can make a lot of financial sense. Buying back your time allows you to be easily paid, eliminates collection calls, reduces back-office paperwork, and offers options–a win-win!
