FACTORING

Do you need funds sooner rather than later? If you don’t have the time to wait for payments from your clients to start rolling in, consider the advantages that factoring has to offer.

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Factoring: An Explanation

If you’re not already familiar with factoring, it can seem a little complicated at first. Many people worry that it’s a loan or a form of debt. It’s not.

Technically, when you’re factoring, you’re selling an asset. Companies called “factors” will purchase your accounts receivable, giving you access to cash that’s immediately available. When your clients pay for the product or service you provided, that money goes to the factoring company.

If there’s money left over, the factoring company returns it to your business after taking a fee. You’re free to grow and run your business without having to deal with collections or late payments.

Which Assets Can You Leverage?

Your clients appreciate it when you offer them extended payment options. In some industries, you have to if you want to keep up with your competitors. Unfortunately, 60 or even 90 days is far too long to wait when you have bills to pay, materials to purchase and employees waiting on their next paycheck.

So, how can factoring help you? Which assets can you use?

You can sell a client’s invoice, allowing you to receive the cash you need in days rather than weeks

Purchase orders are another asset you can sell, which is helpful when you have demand for your products but don’t have the funds to purchase the materials you need to produce them at the moment.

You can also factor contracts when you need funds quickly, particularly when you have reliable clients with good credit.

Invoices

Don’t wait weeks or even months for payment from your clients when you could have cash in hand right away. Sell your invoices to a factor and let them manage the collection process.

Purchase Orders

It can be challenging to satisfy incoming orders if your business doesn’t have materials on hand. Sell your purchase orders to a factor that will give you the financing to bring in supplies today.

Contracts

Do you have reliable clients that pay on time regularly? If so, you can use ongoing contracts your business has as a financial tool. Sell your contracts to boost cash flow. We’ll show you how.

Factoring

has some significant advantages

E

It isn’t a debt.

E

If your credit leaves something to be desired, factoring is still an option.

E

You don’t have to worry about handling collections.

E

Most accounts receivable assets qualify.

Are There Cases When Factoring Won’t Work for You?

In short, yes. Factoring isn’t an option if your company doesn’t have accounts receivable. That doesn’t mean that there aren’t other financing options available for you, though.

What Will Your Clients Think?

You might be worried about what your clients will think about you using a factor. Odds are, they won’t even notice. The clients who do will likely assume the process is part of how your billing system works.

If you still have concerns, talk to us. Some factoring companies will use a “white label payment address,” so your clients are still making payments under your company’s name to a third-party address. Other companies let you collect the payments and pass them along yourself.