Accounts Receivable Factoring Helps Businesses As Economy Turns Around

One indicator for small businesses is a study in a recent Small Business Employment Index from Intuit, Inc. showed that small business employment continued to show growth in December, 2010. Hourly employees at small businesses in the United States worked an average of 24.8-hour work weeks, otherwise 107.5 hours in December or about a 0.2 percent increase from the revised figure stated in November. Overall the employment growth rate for November was revised upward to 0.4 percent. Small business employees averaged monthly pay of about $2,607 per month in December, a decline, compared to the $2,609 per month November figure.

In order to survive the tough economy, there are tactics that some small businesses have long discovered -- factoring, which enables cash flow, and that is something every small business needs. Factoring companies have experienced an uptake in business over the last couple of years, and based on the current economic indicators, and it would appear that things will only get busier for factoring companies in the coming years as the economy heals.

Many businesses believe they do not believe they have enough cash reserves to survive. There was another study conducted by Forbes Insights in association with ACCS (the Association of Chartered Certified Accountants), Certified General Accountants Association of Canada (CGA-Canada) and CNDCEC, the professional body for certified accountants in Italy - based on a survey of about 1,750 small and medium sized enterprises (SMEs) in Canada, China, Italy, Singapore, South Africa, and the UK, with 30 percent of sample micro businesses employing less than 10 employees.

The study shows that most small businesses (SMEs) believed the worst of the recession is over - and there were many businesses - between 31 to 54 percent per country, including those with high growth and were less affected by the global downturn - who believed that they did not have cash reserves enough to survive another downturn.

Whatdoes a small business do to prepare for the future - aside from cutting operating costs, staff, reducing pay and depleting inventory? Many businesses now need to clean up their credit and financials and make sure that solid accounting systems are in place. Financial institutions are not going to lend money when a business has a lack of financial statements or worse yet, credit problems.

On the other hand, factoring can help provide a solution to cash flow problems. It is a fast and efficient means of obtaining cash when needed for growth or to cover operational costs. If there is another downturn small businesses have an affordable option.

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