Search:

Would you like to contribute to this site? Factoring Menu Submit an Article Submit a Tip Place your Ad Add URL Factoring Questions? Contact Us  Factoring Financing   Types of Factoring   Invoice Factoring   Invoice Discounting   Receivables Factoring   Medical Receivables   Freight Factoring   Trucking Factoring   Factoring Forfaiting   Factoring Companies   Factoring Business   Cash Flow   Cash Flow Financing   Accounts Receivables   Receivables Collection   Working Capital   Business Capital   Invoice Financing   Commercial Financing   Business Financing   Business Funding   Small Business Funding   Structured Settlement Funding   Asset Based Lending   Small Business Loans   Commercial Finance   About Factoring

Return To Factoring Article Archive   Is Invoice Factoring Right For Your Business? By Greg De Vries Invoice factoring, (also called accounts receivable finance, or accounts receivable factoring) is a form of commercial finance whereby a business sells its accounts receivable (in the form of invoices) at a discount. Factoring is considered off balance sheet financing in that it is not a form of debt or a form of equity. Factoring is a financing option for young, under-capitalized businesses that have the profit margins to absorb the factors fee. Factoring is a flexible form of loan, which advances money to a company as it issues new invoices. It is a widely used financial product that transacts over $70 billion of volume each year in the United States alone, and is one of the most popular forms of financing in Europe. Factoring is one of the oldest and most powerful cash flow and management tools available to businesses today. It is not a loan and will not show up as debt on your companys balance sheet. It is designed for businesses that want to improve their cash flow by not waiting 30, 45, 60 days for a customer to pay. Factoring Benefits Factoring invoices gives you predictable cash flow. This increased cash flow allows you to take advantage of growth opportunities, early pay discounts, reduce debt or cover operating expenses. If you are concerned with your ability to meet payrolls because of unpredictable cash flow you are a candidate. If your business has seasonal peaks that create cash flow dilemmas, you are a candidate. Factoring is a very simple tool that provides you with predictable cash flow. Cash flow planning and control can become skewed due to uncertainty of payment dates. It creates the needed control over your cash flow that translates into greater production, sales and profitability. Factoring Advance Advanced funding is wired to your business bank account. This can involve a very substantial payment being made right at the start, with most factors paying 70% to 90% through initial advance of the invoice amount followed by a small additional payment, through reserve release, once they collect the invoice. Remember that the credit-worthiness of your customers will have an impact on the advance and discount rates coming from the factoring company. For example if the invoices value is $1,000 an advance rate of 80% equals $800. The balance of the advance is called the 'Reserve'. Conclusion Factoring is a way to get immediate cash. Factoring is a long established and mainstream financing option for businesses. Invoice factoring is the time honored and increasingly utilized financial tool that speeds client cash flow and helps avoid the problems that slow-paying customers can create for fast-growing companies. It has become a financial tool used by growth oriented business to increase working capital. It is a fast, easy and flexible way to improve your cash flow and generate working capital for your company so you can achieve the success you are striving for. About the Author: Greg de Vries is the Managing Director and VP of Marketing for Business to Business Capital Corp - Americas Friendliest Factor. Please visit BTB Capital to receive a no-cost, no-obligation proposal for factoring or contact us at info@btbcapital.com. Capital For Business

Get your Factoring questions answered... Subscribe to our Factoring Newsletter FREE! Your First Name: Your Email Address: Enter above security code

Home  |   Factoring Blog  |   Ask the Factoring Expert  |   Factoring Archive  |   Factoring RSS Feeds  |   Advertise  |   Sitemap