Factoring receivables is a term used to refer to the process where companies can sell their open invoices to receivable factoring companies in exchange for an advance, typically worth 70-90% of the value of each invoice. Financing accounts receivable is a sales transaction, not a loan. This means that your company no longer has the hassle of collecting the invoices from customers and there are no repayment obligations to the factoring company. The invoices are not used as collateral against a loan. They are offered as financial instruments that are traded for cash. Because this type of financing does not require any sort of repayment, there is little business or personal credit requirements for the business owner.
Invoice factoring used to be relatively unknown way of keeping a business financially afloat. However, in today’s economy, invoice factoring is becoming more the norm and many businesses are foregoing getting traditional business loans in favor of this versatile and quick alternative form of financing.
Here’s how it works:
Your company reviews outstanding accounts receivable that is awaiting payment from your customers. Continue reading
In a recent article by Marc Prosser (fitsmallbusiness.com) where he interviews Rohit Arora, founder of Biz2Credit, the numbers are revealed about who is approving business loans and other methods of financing.
Big Banks: 17 – 19%
Small Banks: 44 – 51 %
Credit Unions: 43 – 50%
Alternative Finance: 63 – 67%
Institutional Lenders: 57 – 68% Continue reading
Funding a start-up company is hard. As a matter of fact, one of the number one concerns for start-up businesses is ensuring an adequate cash flow. Finding the money to fund day to day operations can be a daunting task, especially when customers default on the credit terms of their invoices.
However, selling accounts receivable is an alternative that can help find the money they need without going into debt and limiting exposure to defaulted invoices. This means that even new companies with little to no credit can use their assets to stabilize cash flow. Continue reading
Invoice factoring has been around, in some form or another, for centuries. It’s one of most tried and true forms of business financing out there.
Like all things in this day and age, technology has impacted the evolution of factoring. Businesses have begun to sprout up offering online auctions for a company’s receivables, where a business owner can post an invoice and have random investors buy it for a discount.
In theory that means an easy way to generate quick cash flow on an as-needed basis. Plenty of companies have tried these online factoring services, but some problems are beginning to surface. Problems that don’t happen when using a factor like Universal Funding. Continue reading
We live in tough times. Who really knows if the economy is on its way up or about to turn back down? Of course we all hope for the best but, the truth is, we just don’t know.
That’s why protecting cash flow is so important right now. In a growing economy, business owners like you will need to keep up with increasing orders. In a sinking economy, they will need to bridge the gap and keep the doors open.
It doesn’t help that, right now, companies face longer payment terms from customers and tighter loan restrictions from banks.
We all know the economy has been in the dump the last few years. And yes, that has made things considerably more difficult for many businesses. Things like getting bank loans, offering terms to customers and waiting longer to receive payments have wreaked havoc on many small and medium-sized businesses.
None of this is new. The stories have been told on blogs and finance sites and in newspapers over and over again. Continue reading
Plenty of new and existing small businesses have benefited from invoice factoring.
Many companies take advantage of this fast cash funding source and continue to use the money for whatever purposes they wish. They’ve purchased new equipment, paid their vendors early, paid their employees on time, paid off crushing bank debt, invested in marketing, taken on new customers and more. Most importantly, they have lifted the burden of worrying about cash flow and eased the financial stress on their businesses.
But is factoring for all businesses? Continue reading
Let’s say you own a company that has developed an all-new, incredibly cool device that combines a camera, GPS, phone and personal assistant into one super-convenient pocket-sized device.
Yes, it’s kind of like the iPhone, only better.
Your device works all the time, around the globe, without a wireless contract. It’s pure genius.
People who don’t own businesses have this glorified vision that business owners live the high-life. Lots of time off, yachts, expensive cars, the kids in private school… Of course, business owners all know that isn’t even close to the truth. At least, not for the ones who work hard every day to keep the business running and, hopefully, growing.
If you are like so many other U.S. business owners, the only time off you get is when you fall asleep at your computer trying to figure out how to finance the next big order. The yachts and cars might happen in your dreams… but that’s it.
As a business owner, you work hard, and we think you deserve to be rich. Continue reading