Factoring Can Be An
Ideal Solution For Start-Up and/Or Growing Businesses
Factoring is one of
the oldest methods of business financing in existence. The history
of factoring dates back to the days of moneylenders in the middle
ages. Factoring has been the working capital facility of choice in
Europe for centuries. It has taken on a new life in recent years as
a financing method for many businesses in the United States.
Factoring is the
sale of accounts receivable, as opposed to borrowing against them as
you would do with a bank line of credit. By selling your invoices,
you generate immediate cash flow instead of having to wait for your
customers to pay.
Companies often
find themselves in the frustrating position of having sales
opportunities which they cannot accept because of the lack of
financing to support those sales. Banks normally cannot provide
adequate funding for growth due to internal credit policies and
external regulatory restraints. Even if a business can qualify, the
bank line of credit may be totally inadequate to support the
company's sales growth opportunity. Factoring facilities are much
easier to implement compared to acquiring a bank line of credit.
Factors have more flexibility with regard to documentation and
credit issues than banks.
Factoring can be
initiated and terminated very efficiently. When making a first-time
purchase of invoices from a business, factors typically take one to
two weeks to check the credit ratings of the customers and
communicate a discount price. The business receives payment in cash
from the factoring company after delivery and invoicing a customer.
Immediate invoice payment eliminates the sale-to-collection business
cycle; thus allowing businesses caught in a cash crunch to obtain
fast relief. Turnaround on the sale of receivables is only about 24
hours.
Factoring is a sale
of assets (invoices), not a loan. For businesses that either cannot
qualify for traditional debt financing or that simply do not want to
incur more debt; factoring is good alternative means of funding
working capital. Factors purchase all rights in the invoices and the
seller has secondary liability for any invoices not collected.
The factors
undertake debt collection, but the business remains ultimately
responsible to repay any portion of the cash price attributable to
an account that went uncollected. Factoring can be an effective
solution to funding a short term gap in cash flow for the start-up
or rapidly growing business.
There are Three Simple Steps To
Making Money
Online!
Contact me at
anytime through email or messenger. I am here to
help you ;-)
Contact me at
anytime through email or messenger. I am here to
help you ;-)
Charles Fuchs
Vision Management Enterprise Inc.
Instant Messengers
Yahoo ID:
charlesfuchs
AOL AIM ID:
Fuchs5000
