Factoring Accounts Receivables

To new business owners just starting out, financing can be one of the most difficult things to secure. Banks don't like to take what they see as risks, so they are inclined to turn down new businesses that ask for loans, unless they are secured by significant collateral. So, when you, as a new business owner, find yourself without the funds needed to start, grow and build your company, what are your options? Before you give up on your dream of being a successful business person, try factoring accounts receivables as a solution to your financing difficulties.

Factoring Accounts Receivables - A History

Factoring has been around for ages, and the success that business owners have experienced as a result of factoring accounts receivables is evidence that it works. Selling the equity in a company's account receivables is one way to unleash the cash that is sitting in those receivables. Factoring provides a way to finance your business without having to take out a bank loan or side over your house as collateral on a line of credit. Using only your company's A/Rs, you can let loose the equity that is available in them.

Cash makes your business run
Without ready to use money, you will have a very difficult running and maintaining your business. Unless you are just starting out with a small company and can manage to put your expenses on a business credit card, chances are very good that you will need access to cash. Yet, without a bank loan or line of credit, how can you have the amount of money you need to pay employees, order supplies and pay for other business expenses?

This is where factoring your account receivables can work to your advantage. When you sell your account receivables to a factoring company, you relieve your company of the risk of having clients renege on payments. More importantly, you can get immediate cash for your invoices, sometimes as much as 80% of the total. When the invoices are paid in full by your clients, you get the remaining money, for a small service fee.

Differentiating factoring from bank loans
Despite the fact that factoring accounts receivables has been a common business practice over the years, there are still some misconceptions and misunderstandings that arise from the concept of factoring. First, it is important to remember that factoring differs significantly from bank loans. The agreement you develop with a factoring company can be short in duration, as opposed to a bank loan which will most likely require several years of repayment. Furthermore, you won't be bogged down in paperwork when you deal with a factoring accounts receivable company; paperwork is inevitable when it comes to getting money from a bank.

Perhaps the biggest difference between factoring and bank loans is that factoring accounts receivables can provide your business with access to immediate cash; cash that doesn't require any solid collateral as a bank would require. Factoring firms consider shipped, accepted and unpaid invoices from credit worthy clients to be collateral enough.

One toll free call to Factoring Associates can help alleviate your business money problems.

Start today by contacting us here or on our toll-free number. Or apply here and get the accounts receivable funding process going today!

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