Factoring Business: Why you should consider factoring companies for receivables factoring

 
 
 
 
 
 
 

Why you should consider receivables factoring....

Your company may be like many others right now and finding themselves short on cashflow.

If your cash flow is temporarily in a bind and you need some quick cash for whatever reasons, factoring could be a good situation for you.

With lots of companies stretching their payables, you can end up on the bad end of that scenario. Possibly, if you cannot find an answer to this unfortunate situation, it could force you out of business...

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Factoring Business - Factoring Companies & Receivables Factoring.

Do you know that very specific companies exist right now just to help you with temporary financing, called 'business factoring?' This is also called receivables factoring.

These factoring businesses typically 'buy' your receivables in exchange for a percentage of the face value [total amount.] For instance, if a company charges 10%, it will typically pay you 90% of the face value of the receivables it buys. If it charges 20%m you get 80%, and so on...

You paid for your materials [or maybe have payables coming due for these] and you paid for your labor to produce goods and sell them. Now you need your money to continue operating... or to pay your bills... or whatever...

If your cash flow is temporarily in a bind and you need some quick cash for whatever reasons, factoring could be a good situation for you. With lots of companies stretching their payables, you can end up on the bad end of that scenario. Possibly, if you cannot find an answer to this unfortunate situation, it could force you out of business...

Walking into a bank these days and walking out with a quick loan is just not what it used to be. Many or most smaller companies just do not have these options like they did back in the days of 'looser money.'

And if your financials were top notch, you likely would not need temp money any way -- right? It is the same ol' story these days, only worse...

** So it is the old true story about the easiest way to get money is not to need any... **

And unfortunately since a fair number of large companies will jerk you around and not think a thing about it, you're stuck. And you do not deserve it. So if you need some relief for the slow receivable you're carrying, consider business factoring. You can get fast cash and the factoring business will wait for its money to come in. The factoring deal 'settles' when your customers pay their invoices.

This is why the factoring company charges you a fee. Now it waits for its money and you don't. The factoring business fronted you the money instead. So if you need some fast cash for whatever reason, consider an arrangement with a factoring business. it might be the short-term answer you need!

 


 
 
 
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Factoring Business -- Your Very Best Friend for a Moment?

A factoring business buys your receivables for cash in advance, and then waits for the money to come in to liquidate these liabilities they are now holding.

You get cash. The factoring business gets your receivables. To do this for you, these factoring businesses charge a % fee from the receivables they collect. So let's say that you need a quick $10,00 and the factoring business charges a 10% fee.

You would receive $9,000 today and the factoring company would over time collect the $10,000 in receivables you assigned to them. Their profit is the $1,000 [10%] of the deal.

Knowing this scenario, the factoring business is initially interested in the ability of your customers to pay their bills, as well as *your* ability to pay the factoring company back if your customers default on this paper [debt.] So this deal is usually done 'with recourse' which means that you guarantee the deals in case your customers cannot repay them.

This obviously implies that you and your customers should be credit-worthy as in any other credit scenario. Factoring is simply extending credit in this sense...

You can also basically look at factoring businesses as extending you a line of credit because these companies advance moneys in advance, and get paid in arrears.

So if you find yourself in need of advance money to pay your own bills or whatever other costs you have, factoring can be a good and viable alternative to standard walk-in bank financing that can make a lot of sense for you...

There are a few different ways to do factoring, but two to consider are advance funding for current purchase orders you have booked in-house, and advance funding for your current receivables on the books awaiting payment from your customers. Either or both are good sources for quick funds if you need this kind of financial help...

So if you need advance working capital, short-term bridge financing, or just a few extra buck to get you through a dry time -- look into the various factoring companies and factoring businesses. It never hurts to look. So know your options!