Posted by admin | Posted in Alternative Financial Products for Small Business, Cash is King, Factoring Receivables, Receivables Factoring, Small Business, Uncategorized | Posted on 01-10-2012
Companies need to maintain a steady cash flow to keep their businesses running and growing. Whether it is returning to business as usual after the schedule of summer, or something else, fall tends to be a busy season for most businesses. It is critical that the business is in a financial position that will allow them to supply the goods and services associated with an uptake in business.
Cash flow is key to any businesses success! If cash flow is tied up waiting for customers to pay, the ability for the business to keep moving forward can come to a screeching halt. Where does a small business turn if they cannot access they standard banking relationships for the cash necessary to keep the business operation going?
Receivables factoring is an ideal financial solution for new and emerging companies who lack a strong financial backing. Factoring allows the small business to leverage the financial strength of their customers rather than relying on their own credit worthiness.
Accounts receivable factoring can be used for either goods or services, but is only for business to business (B-2-B). Some examples of companies that can benefit from utilizing the financial tool of factoring are janitorial services, commercial landscaping companies, staffing firms, basically any small business that invoices their customers and then waits for payment. In essence, factoring provides short term financing to the client using their invoices. The factor provides the majority of the funds upfront for the invoice, and then collects the receivable from the customer, paying the client the balance, less an administrative fee. The process is very simple and most often takes less than 24 hours for turnaround.