An SME Selling on Credit Terms Has a Hidden Asset: Factoring Cash
Small to medium-sized business (SME) looking to finance the growth of your business, then you know this is challenge, especially during the first couple of years. New companies selling on credit terms need more working capital to grow. If you have a cash flow shortage in your business, then your business could benefit from factoring.
Companies selling on credit terms have a hidden asset that most business owners do not realize can be used for collateral. Most all business owners realize that there is no need to borrow money from a bank in order to offer credit terms to their customers. Invoice factoring is used by businesses to convert sales on credit terms for immediate cash. Factoring is becoming the preferred financial tool for obtaining flexible working capital. Factoring is easy to obtain and only takes minimal paperwork.
Factoring is not based on your financials but on credit strength of your account debtor. And this process usually takes less than a day. Your business can qualify for factoring if it generates sales on open credit terms to customers who have strong credit. Once the factoring company has done their due diligence the invoice will be paid by the factor in as little as 24 hours. After this, the company that you did the work for will owe the factoring company the funds.
However, care must be taken to preserve your cash, as the business may take more time than you planned to be profitable. This is just one more reason why factoring can come in handy. Accounts receivable factoring has helped get many a new business through the toughest of times. The ideal number is to have enough cash put aside to pay all your bills for about 120 days
Factoring is not the same as loans or credit - meaning there are no minimums, maximums, long-term commitments or lengthy applications.All you have to do is use your accounts receivables as collateral and the business may draw cash against the eligible accounts. Accounts receivable factoring services are available to all industries that provide services, or deliver products to commercial accounts. Accounts receivable financing is not a loan, so there is no need to make payments or create debt. Factoring companies like IFG don't expect to buy 100 percent of a company's accounts receivables.
Most factoring companies' professional rates are competitive because each client's circumstances vary, and this may have an impact on the fees charged. The program allows choices of invoices to be factored, enabling customers to retain most of their money, to guarantee adequate cash flow while spending the minimums.
About the Author
The Interface Financial Group provides short-term financial resources including construction factoring and serves clients. IFG offers expertise in factoring, accounting, financing, law, marketing and banking. http://www.ifgnetwork.com
Tell others about
this page:
Comments? Questions? Email Here