r company lacking capital? Or does your business experience seasonal fluctuations for its products and services? Are you worried about the effects a recession can have on your business, or the financial stability of your clients? Today’s troubled economic environment means that businesses are under constant pressure to maintain profitability. Invoice factoring may help.

If you are spending too much time and money on your accounts receivables and collections, invoice factoring can help.

What is invoice factoring? It is the age old practice of using your invoices or receivables as collateral so that a factoring company can give you an infusion of cash. Historically factoring has been around for more than 3,000 years. Recent trends include single invoice factoring which can also be called spot factoring. This is when you factor one invoice at a time.

Factoring is simply a way to acquire business capital without having to make any type of payments to a lender. It’s much better than a typical business loan because you don’t have to worry about monthly payments accumulating every month. Many companies simply don’t want to worry about getting paid by their clients 90 days after invoices are sent out - because it often creates a financial burden on their business to have to wait that long.

Plus these days, some businesses may suffer from a less-than-perfect credit score. Factoring firms are experts at helping you minimize your risk from bad debt while at the same time they help you improve your cash flow dramatically. Some factoring companies can even provide cash flow within two hours wired directly to your bank account. Other companies can take up to 48 hours.

a factoring company collects your receivables for you, providing business capital. This also minimizes your bad debt by making sure your clients pay on time. It can give you peace of mind in having a positive cash flow. Uncertainty regarding cash flow is removed, and your company can be more positive about the future since new orders are more easily filled, employees, utilities and vendors are paid on time and debt payments to credit card companies go out on time.

The professional fees among various factoring companies are competitive. Every client’s circumstances are unique which may have an impact on the fees charged. Not all invoce factoring companies expect to buy 100 percent of your receivables and they often advance up to 90 percent of invoices you are selling.

Ultimately, invoice factoring can take away the worry regarding your clients making their payments, and you can focus on new busniess tather than chasing down slow or no pay clients. Look for invoice factoring companies online today, and start factoring.

Thanks to Kristin Gabriel for contributing this article to our Factoring blog:

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Does your business need money now? If you are a small or medium sized business, it’s likely you are looking in different places besides banks for quick cash. Besides small business loans and credit lines, venture capitalists also offer business factoring options, so you can keep your business running smooth.

What is business factoring?

Factoring and discounting, otherwise known as receivables finance, where small businesses sell their invoices upfront at a discount, is the most popular of all the quick cash alternatives out there.

Business factoring is not considered a loan. It is the purchase of a financial asset i.e. a receivable, a financial transaction whereby a business sells its accounts receivables, often their invoices at a discount. Factoring is the sale of receivables differing from invoice discounting-which is considered borrowing, and the receivable is used as collateral.

Business factoring differs from a bank loan because the emphasis is on the value of the receivables- the financial asset, not the firm’s credit worthiness. Also a bank loan involves two parties whereas factoring involves three. The three people are: The Seller of the receivables, the Debtor and the Factor. The factor usually charges the seller a service charge, as well as interest based on how long the factor must wait to receive payments from the debtor.

Different Types of Factoring

Accounts receivable factoring Invoice factoring Domestic factoring Trade factoring Purchase order factoring

Factoring refers to a practice whereby you sell your receivables for a discount before they are due. Today, entrepreneurial companies offering factoring options are willing to buy creditworthy receivables from a variety of resources. Factoring isn’t cheap, you are paying for the cost of the capital, the extra risk including bad debt, and the paperwork factoring requires. But often times for businesses looking for cash, it’s becoming more of an attractive option.

Small businesses are seeking alternative routes to funding for the first time, and entrepreneurs are ready to offer them.



Thanks to Melissa Peterman for contributing this article to our Factoring blog:

Business Capital Financing

Every business requires an uninterrupted flow of cash to meet all related expenses and this is especially true in the trucking business. There are drivers’ salaries to be paid, fuel and repair bills to be cleared and you might also need to keep a tidy amount ready for unexpected expenses, in case any of your trucks breakdown en-route to their destination.

Freight factoring can solve all these problems. In this process, a freight factoring company will ‘buy’ off your credit invoice that you have issued to your client and pay you the amount of your invoice minus a ‘factoring fee’, which could range between 1.5% to 5%. These companies can also take over your collection activity by collecting the payment from your clients on the due date and thus this method of finance is flexible and can provide you with an opportunity to flourish in your trucking business. However, there are some pros and cons to be kept in mind, before you rush to tie-up with any freight factoring company.

Pros:

The biggest advantage of entering into a freight factoring arrangement is that you will get your invoice amount immediately, even if you have issued a credit invoice. This will improve your cash flow and help you to meet your expenses, take on larger and longer hauls and even put into action any expansion plan that you might have nurtured. You will also require fewer documents and no collateral, without which you would not have gotten a bank loan anyway, even if you did wish for one.

The freight factoring company could, at an additional cost, also handle your receivables department, thus freeing your mind and staff from the trouble of running after your clients for your money. Since the incoming amount only depends on the value of the invoices that you ’sell’ to the factoring company, you will not need to worry about any monthly installments or interest rates, which would have been the case, if you had taken a traditional loan.

Cons:

It is essential to conduct a thorough survey of the freight factoring industry, before you tie-up with a particular factoring company. The factoring company should be able to handle your account efficiently and should make your payments within the stipulated time for you to enjoy the benefits. Their staff should be available to hear your queries and should also be courteous and polite, while handling your queries. Some of your clients too might not like the idea of answering to a third party in financial matters.

You will therefore need to placate them, if you do not wish to lose them as your clients. If you are already working on wafer-thin profit margins, then by paying the ‘factoring fee’, you will only end up transferring your profit to your factoring company. This might prove to be disastrous for your business in the long run. If the factoring company is retaining a certain amount of the invoice as security against bad debt, then that too could prove to be troublesome, in case of any dispute with the company or your client.

Therefore, even though freight factoring seems to be an answer to all your financial woes, by not paying heed to the above points, you could end up in even more trouble.

Thus, it is important to study the pros and cons of this mode of finance, in order to avoid any pitfalls associated with it.



Thanks to Kris Koonar for contributing this article to our Factoring blog:

Have you claimed your Genesis site?

If your trucking business caters to clients on a credit basis, then you might feel the need for regular finance to run your business smoothly. A freight factoring company could help you by providing ready finance against your credit invoices.

Freight factoring companies are financing companies that buy your credit invoices from you. These companies then proceed to wire the invoice amount to your bank account within 24 to 48 hours. The Freight factoring companies retain a ‘factoring fee’ from the invoice amount as their service fees. This fee could range from 1.5% to 5% depending on the arrangement that you have with your freight factoring company. This money can be extremely useful for you to pay your fuel and servicing bills, your employees’ salaries and can even fund your expansion plans. Your freight factoring company could also arrange to collect the payment from your clients on the due date. However, it is essential to locate the right freight factoring company for your trucking business, since your reputation too could suffer due to the misdeeds of the factoring company.

You can compile a list of probable freight factoring companies by looking up the Internet or checking various advertisements placed in related to trade magazines. If any of your friends can refer a factoring company, then it could be better. Check and crosscheck the factoring company, before tying up with them. The freight factoring company should have enough experience in working with trucking companies with similar needs as yours. This will eliminate any trial-and-error processes during the setting-up phase. Since, your clients will also need to be informed of your tie-up with the factoring company, you will need to ensure that they are comfortable with the new arrangement. The freight factoring company’s staff should be polite and tactful, while handling your clients. They should not end up irritating your clients in their zeal to recover any outstanding payments.

The ideal freight factoring company should also have enough funds to wire the amount into your account within the decided time limit. They should not delay any payments or provide lame excuses for the delay on a regular basis. They should also not insist on a long-term contract, since this might prevent you from parting ways, in case you are not comfortable with the arrangement. The factoring fees should be reasonable, but this rate should not be the only criteria, while making your choice.

The factoring company should also have the latest data on hand, so that there is no confusion regarding collection of payments. The factoring company should be easily accessible over the phone, fax and email and should communicate promptly in case of any problem. There should be one or two answerable people in your factoring company that are personally involved in handling your account. The company should also have the resources to grow along with your business. The factoring company should also not withhold any additional sum from your invoice, until your client pays up. They should pay you the entire invoice amount minus the factoring fee immediately. Inquire with some of their regular clients to get an accurate feedback about the factoring company’s quality of service.

You should thus conduct a proper research into the credentials of all the prospective freight factoring companies, before deciding on the ideal freight factoring company that suits your business. The right freight factoring company can hence put an end to your cash flow problems and enable you to haul away smoothly.



Thanks to Kris Koonar for contributing this article to our Factoring blog:

Accounts Receivable Factoring

Invoice factoring is the basic practice of selling invoices to financial factoring companies for the purpose of receiving money right away. Smaller companies often fall into the financial trap of not having available resources and therefore sell their invoices to financial agencies in order to gain working capital. This practice does not require the business to swallow more debt and in fact operates in an opposite manner. Small businesses that don’t utilize the financial tool of accounts receivable factoring acquire more debt by waiting for the accounts receivables to be paid.

Invoice factoring is typically used as a measure to avoid falling further into debt. Without this effective financial management tool many businesses have to adopt more loans or alternatively, put up more collateral for existing loans. Invoice factoring is available at a minimal fee, which makes it an attractive substitute to assuming more debt. In fact, accounts receivable factoring fees are usually set up by way of discount and these rates differ from individual company to company. The great advantage to this type of liquidation is that there are no interest fees to pay and the result is most often better profit margins.

There are many financial companies that offer invoice factoring services. The individual agencies will set up a company with the right set of accounts receivable factoring parameters. After the professionals from the invoice factoring agency assess the individual situation, they will set up the receivables to be factored and proceed accordingly.

Financial agencies that offer accounts receivable factoring are located worldwide and support every industry under the sun. Even truck drivers can sell their invoices to an invoice factoring financial service to free up capital fast. One of the most attractive aspects to an accounts receivable factoring agency is that they customize the service to each business’s individual requirements.

There are as many different types of invoice factoring agencies, as they are rates for factoring invoices. Some purchase the invoices no matter what the receivable total is and some accounts receivable factoring agencies will only liquidate invoices that accumulate more than $100, 000. Generally the higher the invoice factoring total is, the lower the rates will be to take advantage of this financial escape. In cases where the total is in excess of a hundred thousand, a solid accounts receivable factoring agency will offer rates that can be as low as two per cent!

There are many different types of invoice factoring agencies. For example, some agencies will only serve those businesses in the medical profession while others only serve purchase order factoring. There are some accounts receivable factoring agencies that are specifically designed to cater to small business and offer many great advantages that a larger agency wouldn’t necessarily offer. Despite the type of invoice factoring agency that is required for every individual business need, accounts receivable factoring typically happens within a 24 hour time period.



Thanks to Troy Degarnham for contributing this article to our Factoring blog:

Instant Working Capital