Companies with big ambitions will need access to financing that will enable them to realize their goals. It takes money to generate business. Consistent marketing, the use of high quality materials and excellent service requires cash, cash that has become increasingly more difficult to secure. Bank loans have become nearly impossible to qualify for. This has been devastating to companies that had come to rely on such funds to keep their businesses going. One alternative that some companies are beginning to investigate and utilize is accounts receivables factoring.
Receivables factoring is an extremely effective and fast small business financing option. It allows companies to raise a significant amount of capital very quickly. Within 7 days, and many times within 24 hours, a business can have the money they need to stay afloat or even expand. This is an excellent option for those looking to maximize sales. It provides the capital needed to pay for advertising and then to fulfill those orders secured from those marketing efforts.
In order for businesses to be successful, it will be necessary for their target market to know that they exist. This is generally only possible via some sort of focused, marketing campaign. Once people become aware of a company and want to pay for their services, it will take capital to deliver them. Employees have to be compensated and materials need to be purchased before a company receives a single payment. If a business does not have this money on hand, they will have to turn down jobs. If cash is really low, they may never even get to market to potential buyers in the first place. No business can survive without customers and having to turn down business is generally always counter-productive and will have a negative financial impact on a company.
Receivables factoring is a way for businesses to infuse capital into their company, pumping life into their cash stores. As stated above, these monies can be used for advertising in an effort to increase sales and then to satisfy those orders.
Accounts receivables factoring can have a huge impact on a business, though surprisingly, the process is really pretty simple. It involves a Factor and a company with outstanding invoices. A Factor is a company that purchases the invoices of businesses at discounted rates, collects them, returns the money to the owner and then charges a fee for their service. The entire process, once a relationship has been established, takes between 1 and 7 days. It does need to be noted that Factors will only purchase a company’s invoices if their customers have very good- to-excellent credit.
Businesses looking to work with a factor will find that the process is much easier then working with a bank. There is a lot less scrutiny. It doesn’t matter how long the business has been around or the state of their credit. As stated above, as long as their customers have good credit and owe them money, receivables factoring is an option.