You do not have to worry about the dwindling fund lending market for small businesses anymore. Due to slowing down of the economy, banks have become stricter with lending policy and approve less applications than they did before. You cannot be dependent on banks for needed cash flow to help your business get by. Also, the application process for taking loans from banks has become longer and more tedious. Wouldn’t it be great if you had a cash source that can fulfill your businesses’ immediate cash requirement? Even better, how about if it wasn’t a loan. Hence, there would not be any future liability to pay back. Sounds interesting? What we are talking about is called account receivable factoring. This process has never been simpler, with up to 90% of funds in advance, and completed in quick turnaround time.
What is factoring? The concept of ‘factoring’ is specifically designed for the small business owners like you who cannot wait for 15, 30, 45 days etc. for their customers to pay them. Rather, you can sell your invoices to a fund provider at a discount. The discount fees are typically based on one or more of the following, the percent of the invoice that is advanced, the duration period of the invoices, the value/size of the invoices to be purchased or any combination thereof. For example, a company sells a product to a customer and generates a $50,000 invoice payable in 30 days. This is an accounts receivable and an asset to the company. The company however is in need of short term working capital to finance next weeks payroll, but cash from the sale is not expected until 30 days later. Unfortunately their bank says no to a request for short term working capital financing. The company can sell the invoice at a discount (fees 2.5% to 7.0% – 30 days) to a factoring company for immediate cash. The factoring company will then collect the full amount of the invoice from your customer when the invoice is due in 30 days. The factoring company then deducts any fees plus what was previously advanced to the client and any balance gets rebated back to client. Advances on invoices can typically range from 40% to 90%.
Once your cash flow problem is resolved, you can now focus on the prosperity of your business. Another important benefit you will get out of this financing is that you need not carry the burden of paying back the funded amount. So, there is no waiting for the customers’ payments, anxious effort for seeking loans and drudging along for bank approval. So, you can make your small business grow big!
Account Receivable Financing 