Did you know that you have options if you decide to factor your outstanding invoices? Many people are surprised to learn that there are two different types of factoring, and that one option may work better for your business than the other.
Are you constantly looking for ways to juggle your working capital in order to keep your business afloat? Invoice Factoring simply benefits your business by making your capital available quickly, increasing available cash flow, and more. Not by loaning you money, but by liquidating your invoices for cash.
Maintaining a consistent cash flow can be a challenge for any small business trying to stay afloat in an ever-changing economy. When customers aren't paying on time, your bills can start to pile up as well. One of the ways that many businesses are overcoming this challenge is with invoice factoring — the sale of approved invoices to a third party in exchange for immediate cash to meet operating expenses. Invoice factoring are an effective way for businesses to maintain a consistent cash flow.
Many successful businesses are now utilizing invoice factoring as an effective solution to their cash flow problems instead of pursuing a traditional bank loan. Invoice factoring is a type of financing that businesses use which involves selling their accounts receivables to a financing company which pays their invoices for them. The financing company takes on a certain amount of the credit risk of customers who owe the business until they are reimbursed once the customers pay their invoice in full.
It is not uncommon for some businesses to get a little short on cash from time to time due to seasonal slumps, and other slow sale situations. Seeking bank financing is often a traditional solution, but if you know you have some clients who are going to be paying soon, then you may not want to take on the extra responsibility or payment obligation that comes with taking out a small business loan.
In cases such as this, accounts receivable financing may prove to be a worthwhile alternative.
Topics: Financing Government Contractors
Even so-called cash businesses sometimes establish charge accounts for larger customers, and these can lead to delayed and diminished daily cash flow. Add a few holiday closings and a slew of bad weather, and your business can find itself in a cash bind. Your employees will still expect their paychecks and your vendors will want to be paid. In the past, this situation was more easily remedied as you could simply go to the bank and request a business line of credit. If your finances were basically in order, your friendly banker would help you. Unfortunately, that's not the case anymore.
Topics: About Invoice Factoring