Small to Medium-Sized Businesses Take on Invoice Factoring

Banking industry research firm Greenwich Associates says 59 percent of 271 small businesses had applied for a loan within the last 12 months. This means that lending may be on the rise. The market research firm says 57 percent of them were approved. Whereas in April 2010 five percent of the small companies tried to get a loan but by April of 2011, that number jumped to 29 percent.

Well not so fast ... apparently the report also found that many small businesses are being turned away by big banks. No one what will happen with the economy has basically caused banks to restrict credit, and especially to small businesses who have not built their revenues and collateral yet.

Fortunately, as many of the small to medium-sized businesses in America got discouraged with banks and the economy over the last couple of years, many discovered something called accounts receivable factoring. A factoring company can provide businesses with the working capital needed to meet your payroll, bills and even grow your business. Funding a new business for growth can be a real challenge and while a number of small businesses are still in recovery mode, factoring is an excellent solution to acrue additional working capital. Any business with a cash flow shortage should look for a factoring company immediately.

Invoice factoring is a form of funding that help small to medium-sized (SMEs) businesses as they need funds, since the money received is based on their accounts receivables. This means that there are no obligations like there are with bank loans. This financial strategy is ideal for businesses with customers who pay via credit or 60 to 90 days out, as it leverages small businesses accounts receivables. Factoring companies will make arrangements to purchase a company's invoice, or invoices, pays immediately, and in essence, loans money until the company's customer's invoice is paid.

Invoice factoring enables you to get upfront cash fast, and it is a viable alternative to traditional financing such as loans, and credit cards. It is a clean and easy way to get working capital or much needed cash to run your business. Most factoring companies will pay you right away, and then accepts the funds from the vendor later. Almost any business with good customers and outstanding invoices can benefit from invoice factoring. It is much better than having to wait for days, weeks or months to get approved for a traditional business loan. It takes only a few days to set up a factoring account and once the contract is set up, you can usually get your money within 24 to 48 hours or less.

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