A business of big or small faces alot of problems along the way. Often, it is financial aspect of the business. It is very difficult to achieve a steady financial source. It is not guarantee that you have lost of savings for their are times of financial difficulties.
That is why it is important that you know what to do during tough times. Have you heard of accounts receivables factoring? Would you like to know what factoring is and how it can help you? What can you do to make your working capital grow?
Accounts Receivables Factoring – Why Be Interested? Accounts Receivables Factoring is a business financing method where a business owner sells his/her accounts receivables or invoices to a third party lender (also called a factor). The business owner will be given the instant cash by the lender or the factoring company. In return, the lender gets to take over the collection of the business owner’s accounts receivables.
To explain further, let us say you have an invoice worth $1,000. When you sell this invoice to a factoring company, you will be given 80% cash from the total value of the invoice you sold.
The factoring company will then send your customer a notice that his/her debt is now payable to your factoring lender. In the event that your customer has completed his/her payments, then the other 20% will be given to you.
Account receivables factoring is a recognized business financing strategy. This method of factoring are use on most businessAcc. Accounts receivables factoring is another ideal solution if some entrepreneurs failed to rech or submit the requirements of traditional loans or bank loans. Will Your Customers Agree?
Most consumers are already familiar with how a factoring works since it has been used by most businesses, big or small. But if your customers are not aware of this kind of business financing strategy, your factoring company or lender will send them a detailed letter of explanation on how receivables factoring is done. The letter will also assure the client that the whole process is very safe and legal.
Can factoring really raise your working capital? Because the cash is given to you by your factoring company, you can already use it to purchase new machine or equipments, hire new staffs, launch and advertise new products or projects, etc. If unexpectected expenses arise, you can be sure that you won’t have problems dealing with it since you can have the funds available on time.
The approval can take only few minutes and you can have your money in just 24 hours. That is how fast, quick and easy the approval and processing is when applying for account receivables factoring.
A property or an asset as collateral is required on a secured loans and need to submit your invoices. Always keep in mind that if you have good to excellent credit, you can negotiate for a lower interest rates and best deals from your factoring lenders.
Copyright (c) 2010 Irish Taylor
About the Author: Irish Taylor is a business loan consultant with https://www.startupbusinessloans.com and has been providing consumers and business owners with working capital since 1992.