If you have a new business or thinking about starting your own business, an important resource that business should know every company start-ups is factoring. Learn how small business factoring can offer immediate cash you need to grow your business.
Limited resources and cash flow problems may impede growth and many times these two obstacles are causing many small businesses to fail. Small business factoring offers a great alternative to traditional bank loans because there is no set of terms, not required monthly payments and high interest rates.
How does it work?
If your company sells products or services to customers and offers 30-day terms, 60 or 90 days, you may qualify for small business factoring. Also known as accounts receivable factoring and accounts receivable financing, does selling your invoices and accounts receivables to a factoring company. Depending on the company that you work with, you could receive up to 96% of the invoice amount is in cash, and then the company is responsible to collect the invoice and assumes 100% of the credit risk.
According to the financing company that uses your business, might be approved in less than 24 hours and receive your money in a few days or a week. Overall, it’s a very simple process that moves a lot faster than any bank or other traditional lender. The application process is usually very simple, and in many situations there is little to no red tape to deal with.
What can you do with factoring?
The possibilities are endless with this type of financing. Unlike A traditional bank loan where you have to put the money toward a specific use, the money you receive is completely yours to do with as you please. With the freed up cash flow from financing receivables accounts, you can:
-Purchase of new equipment for your business
-Purchase of new and improved inventory or seasonal merchandise
-Pay off existing debt or taxes
-Expand or remodel your store or Office
-Put more money into marketing efforts and advertising
-Just keep the money in an emergency fund in case of unexpected expenses arise
What kind of society can use factoring?
As mentioned before, any company that sells products or services to customers and provides conditions for 30 days, or 90 days 60 is permissible. Some factoring companies specialize in providing funds to specific types of firms, and other companies provide all types of factoring companies. Some of the many industries that use the credits for financing services regularly include freight companies, construction, medical, dental and other medical offices, clothing, agriculture and products, security guard agencies staff, housekeeping, cable installers and maintenance companies and more.
Every company or companies (regardless if they are a small business or a large company) has encountered difficulty in cash flow at one point or another. If you need money fast for small businesses, factoring may be the best solution for your growing business needs. With this easy and flexible method of financing today, take the small business or company to the next level.