Archive for April, 2018

postheadericon Improve business with factoring method

Factoring is also described as debtor finance, cash flow finance and invoice discounting. Due to the economic downturn most of the small and medium size companies are facing a cash flow crunch that hampers the overall business processes of many companies. Fortunately, now factoring services are available that enable businesses to improve their cash flow making these companies financially healthier. In factoring, companies sell their account receivables to factors and get instant cash to run their business operation. If you need instant capital solutions and have poor credit history, factoring funding services would be the utmost option for you. It is the most reliable, flexible and convenient funding solution for small and medium size companies. Factoring is the easiest way to raise working capital finance. The factoring company does not lose anything in the bargain because they do their homework properly before discounting invoices. In case your client does not pay the invoice on the due date, you have to repurchase the invoice from the factoring company. Business funding firms offer quick financing without considering the creditworthiness or standard of your company, but focus primarily on your client. It eliminates the problems of unpaid and lengthy invoices.

Be aware of the benefits

One of the main advantages for business owners to buy invoices through invoice factoring is that is quite easy to obtain rather than most conventional financing. Unlike bank loans, you can easily qualify its prospects. However, your invoices need to be free and clear of any legal and tax encumbrances. Factoring is a highly advantageous funding option for companies that operate using their account receivables. Wholesaler, manufacturer, distributors and other service industry can hire factoring companies to improve their cash flow. Business funding companies enhance your company’s sales, profits, purchasing power and credit rating. With increased credit rating, companies are able to pay its debts promptly. Factoring typically pays around ninety percent of the total invoices owned to you in advance. Factoring companies’ charge fees depending on the credit risk of your client. If your client is likely to pay their invoices within thirty days, factors charge a smaller fee, than if they take 60-120 days to pay their invoices. With recent data it is observed that if one wants to avoid the traditional loan then it is advisable that one grab the help of invoice factoring which is an alternative to provide cash for company. With invoice factoring one can also generate cash from the sale of closed invoices.