Despite what you may have heard, factoring isn't just for failing, cash-flow deprived businesses. In fact, factoring companies ideally look for clients and businesses that are ready to grow—not just survive. Here are a few reasons why factoring helps grow your business. How Invoice Factoring Works Invoice factoring is a straight-forward, alternative funding solution that removes the red-tape from banks and gets you the money you need quickly. How? By exchanging customer invoices for cash today.Instead of waiting weeks (sometimes months) to collect on your invoices, sell them and get the funding you need now. While it does help companies pay [...]
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While a viable and easy funding option, invoice factoring sometimes gets a bad reputation. Some say it is impossible to avoid high-interest rates. Others say it’s only for large business. Some people even think the process is a hassle for your clients. Those statements couldn’t be more wrong. Let’s break down a few common factoring misconceptions and myths. Factoring Misconceptions and Myths You Need to Stop Listening To Whether they are ill-informed, slightly off or completely wrong, these factoring misconceptions and myths are passed around through water cooler talk. But, it's time you stop believing everything you hear. 1. Factoring [...]
Growing, expanding and running your business requires cash and funding. Many companies find this needed cash through traditional funding situations like bank loans. However, these don’t work for every business. When a company has unique funding needs they often look for alternative options like factoring. But, often times you're left thinking: will factoring work for my business? What is Invoice Factoring? One funding option is invoice factoring. Businesses or companies can sell their accounts receivable invoices (at a discount) to a funding source for cash, essentially factoring future payments for funding now. But, would factoring work for your business? Isn’t Factoring [...]
Factoring has provided important funding to businesses, helping them with capital to grow. They provide needed funds when businesses start struggling with cash availability. It’s the financing you turn to when you have the potential or assets, but not the cash. Unfortunately, there are a few factoring companies that might try and take advantage of the their client's lack of knowledge with the process. Thorough research isn’t just suggested—it’s required—before signing a factoring agreement. Generally, understanding what you are signing, before signing is standard protocol. But, this is especially true for factoring agreements. Some companies fill their agreements with extra requirements [...]
Every day business owners juggle the cash flow demands of their companies. More than ever, they are turning to invoice factoring as a trusted solution, even when banks decline loans and credit lines. If you are considering accounts receivable funding it pays to be prepared. Save time and money by understanding these five tips before making application to factor your accounts receivable: […]
When a business is strapped for cash they often turn to factoring accounts receivable as a financing solution. Of course a factoring company expects to earn a profit on the cash advance and charges a fee for their service. Since the overall goal is improved cash flow, a company considering accounts receivable financing will carefully weigh the benefits against the costs. Here are five ways a business can reduce or offset the cost of factoring and still improve cash flow: Strategy #1 – Early Payment Discounts Use the money to take advantage of early payment discounts offered by suppliers and service [...]
If you plan on selling invoices it is important to know whether the funding proposal is for “recourse” or “non-recourse” factoring. Here is an overview of both methods. A Look at Non-Recourse Factoring Just like it sounds, there is no recourse for unpaid receivables against the client. The client selling invoices is not financially obligated to the factoring company in the event an approved and funded invoice is not paid by the customer. To protect their investment, the factoring company will check the credit strength of account debtors and verify invoices with customers. They will also want to handle the payment [...]
Being a contractor in today's environment is extremely difficult. Banks are not lending and contractors are reliant on their customers to pay their invoices in a timely manner, which most of the time means 30-60-90 days. All the while you’re expected to make payroll, pay vendors and try to grow your business. This is impossible without access to working capital and if a bank won't lend you the money you have got to either: Turn down jobs Find jobs where General Contractors/owners pay promptly, which aren’t abundant because most contracts are “paid-when-paid” Find an alternative solution to improve their cash flow [...]