Using factoring to help improve cash flow
Cash flow has always been an issue for small and growing businesses. Factoring is a fast, easy and flexible way to provide your business with cash. Factoring improves cash flow and creates working capital for your company by allowing you to raise capital from the unpaid invoices owed to you. Through the power of factoring, you obtain immediate flow of cash that is usually held back for terms of 30, 60 or 90 days in your many accounts receivable. This instant cash flow can help improve your chance of business growth, reduce debt or help pay for operating costs. Contrary to a traditional loan, factoring does not add to your overall existing debt and does not need to be repaid. As you sell your accounts receivable invoices to a factor, up to 90% of the value of those accounts can be released to you in form of cash within 24 hours. Once payments on those outstanding accounts are made from your customers, the remaining 10% percent less a percentage in reserve for his fee is paid to you. This is probably the fastest and easiest way to get your hands on much needed cash rather than borrowing from a bank. You simply convert one asset, accounts receivable invoices, into another asset which is cash.
For so many businesses, outstanding sales invoices are their largest assets. These unpaid accounts can greatly impact the potential growth of a business and sometimes may force a business into bankruptcy. Because most of the smaller businesses don't have the appropriate resources or information to efficiently collect their unpaid invoices, factoring can be the only best way to avoid debt collection and help manage the books. The factor chases and collects outstanding invoice payments on your behalf. New companies can benefit from factoring as well since there is no requirement for a long term credit history. Funding is basically based on the depth of the companies' invoices and is available as soon as a company raises its first invoice and grows in line with its sales.
Factoring is an easy, fast and reliable financial transaction that allows you to quickly have access to your working capital simply based on the worthiness of your customers. Factoring is the best financing resource that allows a smaller or growing company to continually have the capacity to meet increasing demand without adding or increasing debt. This can be very attractive to anyone who desires to improve his business cash flow immediately but doesn't want to have to fill out an application to borrow money from a financial institution. Factoring can be a financial solution to a wide range of businesses, including start-ups, fast growing businesses, distressed businesses and healthy business looking for an opportunity for business growth.
Factoring helps businesses to avoid the loss of business to competitors who seem to have better cash flow to fulfill their business needs. It also helps businesses to spend less time managing their account receivable and more time managing the business. Factoring can help to pay off loans and other debts. Factoring is the best financing option and the only one that can always grow with your company. You never have to go through a complicated and lengthy application process as your business continues to grow. Factoring allows you to better focus on expanding your business by simply providing you the basic capital.
Whatever your business day to day needs, whether those needs are for immediate cash flow or for your business equipment upgrade, factoring can help you get your hands on some much needed cash.