Factoring

Are you a small business owner in need of cash to effectively sustain and operate your business? Do you need to get cash sooner than your customers will pay it? It sounds like you might benefit from factoring, a financing procedure that allows you to sell your accounts receivable to a factoring company in return for cash. Sound like something you might be able to use? Here's more information on how factoring works and its many benefits.

What is factoring?

In a few words, factoring is a type of financing used by companies in order to turn their accounts receivable (known also as debt owing) into cash financing. Often, new companies who have not built up a reputation or history with creditors and other new accounts have a difficult time finding enough unsecured (i.e. not attached to collateral) financial capital to keep them afloat for the first while as they struggle to meet business demands. Having enough money to pay employees regularly in addition to the risk of customers' unpaid accounts can be difficult at best for any company. This is where factoring can help you.

With factoring, you can get money in exchange for your accounts receivable which is used as collateral. And it's not a loan. Rather, factoring is a process that uses your customers' credit as collateral for cash. Let's say you have a half dozen outstanding accounts receivable from various customers. If you had the money, you could put it to good use in the company, but the payments aren't due for a short time. We will buy those accounts receivable from you, for companies with a good history of on-time payments, and provide you with cash in return. For a small fee, you can enjoy the freedom of having cash to run your business.

Benefits of factoring
There are many benefits to factoring, particularly for small companies. For example, some small companies use a factor for all of their accounts receivable because it means they do not have to have an accounts receivable or collection department in their own company. Selling their debt owing accounts can be less expensive than having their own department chase unpaid accounts.

For companies that need money to sustain their services, factoring provides fast cash. No more waiting the 60 or 90 days until your customers' invoices are due. With factoring, you will have cash in your hand as soon as possible. In addition to getting money to run your company, factoring also removes the risk of customers reneging on their invoices. So in addition to reducing the possibility of having to deal with unpaid invoices, factoring also increases your cash flow and allows you to spend money on business-building activities, rather than on maintaining an accounts receivable department.

In order to find out more information on how your company can take advantages of the many benefits that factoring has to offer, consult a professional about your options. They can provide you with all the details of factoring, including service fees. Waiting around for money to pay company bills just doesn't make good business sense, but factoring certainly does.

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

FAQ | Glossary | Process | Required Documents | Services
Accounts Receivables Outsourcing | Small Business Funding
Accounts Receivable Management | Business Receivable Factoring
Factoring Financial Services | Accounts Receivable Factoring Company
Factoring Accounts Receivables | Accounts Receivables Factoring