Debt factoring enables continued growth of your business without having to worry about the inevitable cash crunch that comes with robust sales. Accounts receivable factoring is a simple concept whereby receivables or invoices are sold for immediate cash. The process is simple and normally requires verification of the invoice before funding can take place. With factoring, you also get the benefit of the factors culling out the bad customers as well as their professional cash collection skills. The funding advance can be up to 90% of an invoices value. The factoring advance to your business is normally funded within 48 hours. Business factoring rates are determined by a combination of your customer base creditworthiness, average payment cycle, invoice size and factoring volume.
Debt factoring provides over 100 billion dollars to industry each year. In fact, it is an old financial service used by multi-billion dollar business that is now available to smaller sized businesses to which banks are reluctant to lend funds. Factoring financing is the best way to fill the tremendous void that banks have created.
Accounts receivables financing is selling accounts receivables (invoices) debt, representing money due from the customers to a factoring company, at a discount from face value so that it does not have to wait the normal 30-45 days for its accounts receivable to be paid. The invoice debt factoring helps a company speed up its cash flow, thereby enabling it to more readily pay its current obligations and grow.
Not many business owners would turn to a factoring company if the bank refused to increase a debt line, but it is also for this reason that the factor exists. Many new and growing businesses have trouble obtaining traditional bank financing due to their length of time in business, profitability, debt structure, or financial strength. Factoring company allows these companies to convert their accounts receivable debt into instant cash. Once you have delivered your product or service and generated an approved invoice, you can get your money in as little as 24 hrs. Factoring is as much for the growing company with cash flow problems as it is for well run solvent concerns.Through accounts receivables financing a factoring company can help a company stay current with its vendors and other financial obligations such as payroll and taxes.
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