Article: Factoring Provides Alternative Source of Working Capital

Whether you are a machinist operating out of a garage or a staffing
company placing hundreds of workers in the largest firms, you undoubtedly
face cash flow dilemmas from time to time.
   The uncomfortable ritual of making
incoming cash receipts stretch to cover short term obligations frustrates
even the most seasoned business managers.

In recent years, an increasing number of businesses have discovered that
factoring accounts receivable can combat the ups and downs of unpredictable
cash flow cycles.
  More importantly, invoice factoring companiess are providing the small business
community with a viable source of working capital when conventional
business financing is not always an option.

 

Historically, the bulk of account receivable factoring was predominately in the textile,
furniture and apparel industries.
  Today, factoring firms are working
with all types of industries, including: manufacturers, service providers,
transportation companies and high technology firms.
  Nationally, as growing firms
continue to prosper, suppliers and contractors are looking
for additional sources of working capital to accommodate increased sales volume.
 

 

The overall increase in invoice factoring volume is mainly attributed
to the credit crunch in the late 80s.
  As the availability of bank
commercial credit tightens, more businesses look towards alternative
sources of financing to achieve growth.
 

 

Factoring companies can help those firms that banks often find difficult
to approve such as start-up companies whose growth outstrips cash.
 
The primary focus in a receivables factoring relationship is the credit-worthiness
of the customers being invoiced and the client’s ability to produce a
quality product or service.
   Simply put, if the business has an
acceptable product or service that it provides to a creditworthy
customer then the business is a candidate for invoice factoring.

 

The fact is that most companies share a common dilemma during
periods of rapid growth of incoming orders draining cash flow.
 
Factoring financing not only provides immediate cash but, efficient
businesses also use it as a tool to increase profit margins:

1.    Take Advantage of Early Payment  Discounts - Having access to
cash enables businesses to save on average 2% by taking advantage
of early payment terms offered by suppliers.
  The points saved by
reducing raw materials costs helps to offset the financial factoring fee.
 

2.    Take Advantage of Volume Discounts - Having cash also
enables businesses to buy raw materials in greater volume.
 
This saves money and directly impacts the bottom line.

3.    Reduce Late Payment Penalties and Interest Charges - Having
immediate cash on hand to pay current obligations as they become
due eliminates late charges from suppliers and other creditors.
 

4.    Meet Obligations on Time - Paying vendors on time helps
to establish a solid credit track record and allows for
increased future credit limits from vendors as well as financial institutions.

5.    Offer Invoice Credit Terms to Customers - Offering credit terms
to customers is a common way to increase sales by making it “easier”
for customers to buy.
  Having financial backing to carry accounts receivable
is essential if a business wants to be able to follow through on its commitments.
 
Reputable account receivable factoring companies encourage “managed” growth
by consulting with clients regarding exposures and other
risks when taking on new credit accounts.

 

The difference between invoice factoring and other sources of financing is
that the factoring company actually purchases and tracks commercial invoices.
 
In addition to providing immediate cash on invoices, the factoring company 
performs valuable credit analysis on new and existing customers
and conducts professional, routine follow up on invoices as they become due.
  

 

For the business manager who spends a good portion of the day collecting invoices,
bookkeeping and searching for capital, the entire factoring package
offers peace of mind.
  The manager can actually focus on important
aspects of the business that are often pushed aside,
such as marketing and production.

 

Depending on the agreement, businesses can pick and choose
which invoices they wish to sell to the invoice factoring company, who immediately
advances eighty percent or more of the face value of the invoices.
 
The balance of the funds, less the discount fee,
is released once the invoice is collected.
  

 

The cost of doing business with a factoring company is the discount
taken on the invoices submitted for funding.
  Fees range from 1 to 3percent,
depending on volume, credit-worthiness of the customers sold and overall risk.
 
The discount taken is best compared to a merchant accepting
a Visa or MasterCard transaction and receiving immediate payment,
less a percentage or discount, before the actual cardholder
has paid his or her monthly statement.
 

 

Setting up a factoring relationship is quick and easy in comparison
to other forms of financing.
  Applications simply call for basic company
information and a customer list.
  Years of profitability are not required
which makes factoring an option for startups generating receivables.
  It is possible
that funding can occur in as little as a couple of days after the receipt
of the application and invoices.

 

Each factoring company operates slightly different.  It is important to understand which
programs
  provide the greatest benefits and at the least cost. Several
criteria should be addressed
  when searching for a reputable factor.  
Are there setup fees, maintenance fees or penalty fees?
Is there a long term contract? Are there monthly minimums?
Does the factor provide credit and collection services at
no additional charge? What accounting reports will the factor supply?
 
What value-added services does it provide?
 

 

Most business bankers are a good referral source for reputable
factoring companies.
  Bankers refer to factoring companies because they realize
that although the customer may not be bankable at the time of the referral,
in a short time it could be a viable candidate for conventional financing.
As a short term financing solution, factoring relationships
generally run from 6 months to a couple of years.
   

 

Businesses choosing to maintain momentum, despite a lack of conventional
financing options, find that invoice factoring not only offers cash but also a
stable foundation on which to build. They look to a future of managed
growth and profitable performance that will bridge the gap to qualifying for bank financing.
  

 

 

 

 

 

Factoring Account Receivables Services
For All Industries And All Company Sizes


Business Services Companies
Trucking and Transportation Companies
Government Contractors Suppliers
Security Companies Guard Agencies

Staffing Temporary Employment Agencies

 

Contact our accounts receivable factoring specialists at:

Toll Free:  888-266-0197

Online Invoice Facoring Request Form

Factoring Articles

How To Increase Your Cash Flow With Invoice Factoring


Comparing Invoice Factoring To Bank Loans

Company Information    
Invoice Factoring Frequently Asked Questions
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Our Factoring Company Locations
Invoice Factoring Testimonials


Discover Why Business Chooses Us

OCF INVOICE FACTORING COMPANY
 - Providing factoring services nationwide
 - Over 70 years of factoring company experience
 - Up to 97% Advance Rates


Why Invoice Factoring is Necessary

In recent years, an increasing number of businesses have discovered
that invoice factoring can combat the ups and downs of unpredictable cash flow cycles.

More importantly, factoring companies are providing the business community
with a viable source of working capital when conventional business financing is not always an option.
 

People consider the
invoice factoring
discount a small cost of doing
business. A two-three-percent factoring
discount for a 30-day invoice is common. Compared with the problem
of not having cash when you need it to operate, the receivable credit line
discount is negligible.
Look at the invoice factoring company collecting the  discount as though your business had
offered the customer a
discount for paying cash. It works out the same.


How Invoice Factoring Works


Setting up a
factoring relationship is quick and easy in comparison
to other forms of business financing.  Applications simply call for basic
company information and a customer list.  Years of profitability are not
required which makes invoice factoring an option for startups generating accounts receivables.
 It is possible that funding can occur in as little as a couple of
days after the invoice factoring company receives your application and invoices.

Benefits of Factoring Invoices

Factoring invoices can offer many benefits to cash-hungry companies.
Rather than wait 30, 60, 90 days or longer for payment on a
product or service that has already been delivered, a business
can factor (sell) its receivables for cash at a small discount
off the amount of the invoice.

Payroll, marketing efforts, and working capital are
just a few of the business needs that can be met with this instant cash from factoring.

Factoring invoices provides the means for a manufacturer to
replenish inventory and make more products to sell:
There is no longer a need to wait for earlier sales to be paid.
Factoring is not just a cash management tool for manufacturers:
Almost any type of business can benefit from factoring.

 

Why Receivable Factoring
Appeals to the Start-Ups

Factoring is especially appealing to young and rapidly growing companies. Since the invoice factoring process shortens their business cash flow cycle, these businesses can grow faster. The ability to make more products to sell while waiting for invoices to be paid is largely eliminated. Such businesses usually net much more profit with receivables factoring than without, even when the discount is considered.

Receivable Factoring Company vs. Bank Loans

Factoring has been around for thousands of years. Factoring companies  pay cash for the right to receive the future payments on your receivables and invoices. An unpaid accounts receivable or invoice has value. It is a  debt your customer has agreed to pay in the near future.

So, why not simply go over to the friendly
banker for an account receivable loan to alleviate cash flow problems? A small business loan can be difficult if not impossible to receive, especially for a young, high-growth operation, because small business money bankers are not expected to decrease lending restrictions soon. The relationships between businesses and their small business bankers are not as strong or as dependable as they used to be.
 

Account Receivable Factoring Frequently Asked Questions

Unlike The Others, You Actually Make Money With Our Account Receivable Factoring Rates

 


OUR PROVEN INVOICE FACTORING PROGRAMS
HELP BOOST YOUR CASH PROFITS

Contact our account receivable factoring specialists at:

Toll Free:  888-266-0197

On-Line Factoring
Request Form




Partial List Of Industries That We Provide Factoring
Factoring Staffing company
Factoring Building Products Distributor
Factoring Manufacturing company
Factoring Maintenance Service
Factoring Service Providers
Financing for small and medium sized service companies
such as commercial suppliers, technology consultants
and janitorial companies,etc.

Factoring Metalized coating
Factoring Auto Parts company
Factoring Powder Coating
Factoring Cable Contractors
Factoring Utility Construction company
Factoring Machine Shop
Factoring Oil and Gas Industry
Factoring Trucking company
Financing for trucking companies,
freight brokers and commercial transportation companies

Factoring Freight Forwarding company
Factoring Healthcare Staffing company
Factoring Government Contracts
Financing for companies that provide services and products
to state and federal government agencies

Factoring Distributors
Factoring Freight & Trucking
Factoring Manufacturers
Factoring Medical Practitioners
Factoring Security Guards
Financing for companies that provide security guards
to commercial, industrial and government sites

Factoring Temp Staffing Agencies
Financing for staffing and temporary employment
in the business and medical services field

And Many More


More Links to Help You Find Information

accounts receivable loansinvoice factoring| factoring services
| factoring business| bank factoringmedical receivable factoring
| financing trucking

We are currently providing account receivable factoring services nationwide including the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho State, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.


Just Some of The Industries That we Provide Invoice Factoring Services
Freight Factoring |  Government Contract Factoring | Medical Staffing Factoring
|
Temp Staffing Factoring | Oil & Gas Industry Factoring

 


Staffing invoice factoring company
Building Products Distributor cash flow factoring
Building Products Waterproofing Distributor account factoring
Manufacturing account receivable  factoring
Maintenance Service receivable factoring
Machine Knives invoice factoring company

Custom Auto Body for Emergency and accounts receivable factoring company
Municipality Vehicles  factoring  loan
Parts and Installations business factoring
Metalized coating invoice factoring company
Auto Parts accounts factoring company
Powder Coating invoice factoring
Utility Construction receivables factoring
Machine Shop invoice factoring company
Trucking invoice factoring company
Trucking - Refrigerated Freight  factoring
Trucking - Dry Freight truck factoring
Trucking - Over the Road freight  factoring company
Security Services account receivable financing
Commercial & Industrial Refrigeration invoice factoring



You Can Learn More About Factoring Services Here

How To Switch Invoice Factoring Companies

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