Can accounts
receivable factoring help your business grow?
Summary:
Is your business
in need of financing? Been turned away by the bank? Learn about accounts
receivable factoring - an innovative way to finance your business.
Keywords:
accounts
receivable factoring, invoice factoring, factoring
Article Body:
Are you stuck
with great but slow-paying clients? It is interesting how your biggest asset
(great clients) can also be your biggest liability. But that is how business
is. And as an owner, you must adapt.
Whether you like it or not, slow-paying customers are here to stay. As a rule
of thumb, commercial clients pay their bills in 30 to 60 days. And lately, the
trend has been deteriorating. So, what do you do if you have slow-paying
receivables?
Many owners try to go to the bank to get a business loan. Not surprisingly, few
business owners get business loans. As a rule, banks will only finance
companies that have long and established histories. This is not the case if
your company is new or emerging from tough times.
If your biggest challenge is that you cannot afford to wait up to 60 days to
get paid by your customers, then the solution is accounts receivable factoring.
Most commonly known as factoring, this type of financing eliminates the usual
wait to get paid. It provides you with
the necessary funds to pay suppliers, meet payroll, and take on new business
opportunities.
And how does factoring work? Simple:
1. You finish the work and send an invoice to your client. You also send a copy
to the accounts receivable factoring company.
2. The financing company advances you 70% to 90% of the invoice (a small
reserve is held to handle disputes, etc.)
3. You get the funds in 24 hours
4. As soon the customer pays the invoice to the financing company, they rebate
the reserve (less a small fee)
As you can see, accounts receivable factoring can easily be integrated into
your business, providing you with prompt invoice payments. Usually, funds are
advanced within 24 hours of submitting invoices.
Accounts receivable factoring is easy to qualify for. Accounts can be set up in
as little as 4 business days. As opposed to business loans, the main
requirement for factoring is to do business with strong credit-worthy
customers. So if you do business with good commercial clients (or the
government), be sure to add factoring to your business tool chest.
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