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Making A Decision On Equipment Factoring
Instead of asking for a loan, you are taking the money you are already going to make and asking to be paid for it now instead of when the customers feel they can pay you. A factoring firm will be able to give you money for all the invoices you generate so you have funds to pay for new equipment and other business needs. Customers will now be in charge of paying the factoring firm instead of your company with their bills. Factoring is great since you don't have to deal with any of the collections and the hassle that it can be to collect money from your customers. Now you get to sit back and have the money in your account within a few days and then you can use it to pay for other business needs. It is important that you are working with customers that actually pay their bills on time and that you are able to have the right type of outcome with the customers paying the factoring company or they may terminate their contract with you. In some cases they may ask for credit history of the customers before they will take on the invoices that you need to sell. When you sell off your invoices you will not be able to make the complete invoice amount. Usually you only make about 80 to 90 percent of the invoice amount so you have to really look at this amount and to see if it is worth it for you. When you look at how much money is sitting out there in your accounts receivables you may quickly find that any cost you pay to get the money faster is going to be worth it. Get to know your books ahead of time so you can make the best decision possible when it comes to equipment factoring and using this as a way of funding your cash flow. Factoring to finance your equipment is a great way to keep sales coming in. You will have the money you need to pay for the equipment so you can manufacture products that the customers purchase and it provides you with more sales. Watch how much you invest as you need to be careful with the money and avoid investing too much in one thing and not enough money into other things. Finding the right factoring company to work with is a big decision. You need to work with a company that understands your needs and your financial position. You must be able to choose a company with low fees but one that can get you the money immediately. When you use factoring you are no longer dealing with the customers in the same way you used to, which can be a big adjustment for your customers. Make sure they understand the new system and that they are also comfortable with it. |
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