Wednesday, May 23, 2012

Invoice Factoring Can Help Your Small Business

In the business world, opportunities can come from unexpected places. Being ready for these new chances to expand and grow is what separates a growing business from a stagnant one. Having the capital ready to invest allows you to quickly pursue new ideas. 


But sadly in todays economic environment cash is in short supply. But one thing many companies do have is an abundance of accounts receivables. Using invoice factoring, you can turn your receivables into cash, when time is precious.

Invoice factoring enables a small business to sell its accounts receivables to a third party at a discount. The small company receives almost immediate cash which it can use to fund new opportunities. When the invoice is paid in full the company receives the remaining balance less the factoring companies fee which is 3% or so.

In todays fast paced business world waiting for customers to pay an open invoice can take weeks or even months. When a business can't wait it uses invoice factoring. Factoring companies can advance up to 90 percent of an invoice total in under 24 hours. The reason it can be done so quickly is that factoring is not a loan, it's the purchase of receivables or financial assets. Bank loans usually are between two parties, while factoring involves 3 parties. Banks base their loan on credit worthiness but factoring bases its decision on the value of the receivables. There are no lengthy applications or long term commitments.

With invoice factoring a small company has access to quick money to expand, pay taxes, pay insurance, restock, or reestablish cash flow. For further invoice factoring information go to cbacfunding.com  


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7 comments:

  1. Your post is certainly one of the best source of valuable information every reader must follow. Glad to hear a lot from you soon. Keep on sharing! Thanks

    ReplyDelete
  2. Much of the justification for the investment in the Olympics has been the increased trade it will bring to UK PLC. If that’s true there could be many businesses out there over-stretching themselves – good in the long run but dangerous if the funds aren’t there to finance the increased level of business. Equally there could be businesses thinking – we’d love to take advantage of this but we just can’t afford to.
    http://ceoworld.biz/ceo/2012/04/24/startups-invoice-factoring-your-ability-to-grow-your-access-to-cash

    ReplyDelete
  3. Accessing cash from your receivables is a good idea if your customers are paying their invoices. If they are not you are setting yourself up for disaster. In today's economy many companies are also coming up short in paying their bills. It's a fine line businesses have to walk.

    ReplyDelete
  4. It was a very great and resourceful information that all small business company should be aware of. Invoice factoring was a really effective and good choice for merchandisers. Keep it up sir!

    ReplyDelete
    Replies
    1. It is a lesser known way to raise money for a business emergency.

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  5. Maintaining a consistent cash flow can be a challenge for any small business trying to stay afloat in an ever-changing economy. When customers aren't paying on time, your bills can start to pile up as well. One of the ways that many businesses are overcoming this challenge is with invoice factoring the sale of approved invoices to a third party in exchange for immediate cash to meet operating expenses. Invoice factoring are an effective way for businesses to maintain a consistent cash flow.

    ReplyDelete
    Replies
    1. Many businesses have a problem collecting on their receivables. Invoice factoring can be a way to relieve that problem. I wouldn't use invoice factoring on my paying accounts.

      Delete

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