Factoring is not as complicated as it sounds to the small business owner who may be unfamiliar with this type of financing solution.
The concept is quite easy to understand. Large companies like Target, Costco and Wal-Mart have been using factoring instruments for decades. In turn, many small and medium sized companies who have customers, who are large retailers like Wal-Mart and Target, also use factoring.
Invoice factoring companies specialize in bridging the gap of extraneous invoice terms that extend well past 30 days. The invoice is the asset that is promised or sold to the factoring company. The business gets a large percent of the value of the invoices up front. Businesses who take advantage of working with a factoring company get an instant flow of money, and can use that capital immediately to build the business instead of waiting for payments.
Working with an invoice factoring company is an excellent way to maintain a steady and reliable flow of cash. Sometimes there is a bare patch while you are waiting on accounts to come due, and expansion may be possible in those times if you have access to capital and can bid on new jobs. You don’t want to pass on growth and expansion simply because your accounts receivable take time to pay.
Dealing with a factoring company can eliminate that scenario. If you have a steady stream of invoices but your operating cash seesaws back and forth, consider factoring those invoices.
For more information please call 1-800-405-6035 or click here, and one of our factoring specialists will follow-up with you.