Invoice or receivables factoring is a tool that will benefit any business or entity which sells goods or services and waits for invoice payment.   Factoring is a tool through which businesses can get immediate money from a factoring company by selling their accounts receivable at a discounted rate. The discounted rate charged by a factoring company, is similar, and can be compared to offering your customers a discount to pay your invoice quickly, for example offering your customer payment terms of 2% for payment in 10 days.

Factoring services can be advantageous to various businesses such as staffing companies, janitorial service providers, web designers, etc.  Factoring is extremely effective to help small businesses manage their payroll demands.  Factoring services can provide cash flow assistance to both product based businesses and service providers.  Any firm that needs financial assistance should consider invoices factoring as a way to improve operational cash flow.

Often times start-up businesses, or businesses that have not established a banking relationship, find that they have difficulty obtaining financing through the normal channels.  Don’t take “No” for an answer; Get creative!

Factoring is a perfect fit for such businesses.  The approval process with a factor is based on the credit worthiness of your business’ customers, not the credit strength of your business.    Factoring can often help your business grow and will set the stage for a banking relationship. This is one of the greatest advantages of the receivables factoring industry; offering a creative solution to keep the cash flowing while building business credibility.

Accounts receivable factoring is not necessarily a new idea, but with the economic challenges of our times, factoring is becoming a common solution to improve slow cash flow among business owners.   It does not matter whether the company is small or large, start-up or well-established; any business that could benefit from improved cash flow by receiving immediate payment of their invoices should consider receivable factoring as an option.