Factoring mode of financing available from AR Cash Flow
A business’ big customers maybe loyal and financially sound but slow to pay due to corporate red tape or a longer billing cycle. That is no problem for them. Meanwhile, the business has got its own people to pay like employees and suppliers.
It needs cash and it needs it now.
Is factoring right for the business? Traditionally, this mode of financing works best for small to mid-sized companies that do not have much collateral yet or start-ups that have not developed yet.
In the latter case, it can be the financing measure that fills the gap needed. Factoring also fills a need for rapidly-expanding companies who are outgrowing their operating capital.
Despite the benefits of factoring, many businesses do not take advantage of this financing tool, either because they are unaware of its availability or due to misperceptions on how it works.
Factoring works like this: A factor purchases its clients' invoices and immediately advances most of the invoice amount in cash. The remainder of the invoice amount is remitted to the client upon collection, minus a small service fee. In selecting a factoring company, it is important to have the factoring firm specify up front if there will be any additional processing, administrative or other hidden fees in addition to the percentage charge.
Factoring mode of financing is available from AR Cash Flow .
10-Jul-2008