"We have plenty of business, but what we really need is cash to run our business!"
Have you ever heard a frustrated business owner utter this remark? Or thought it yourself?
What would you say if I told you I could help you or that other frustrated business owner get that cash to keep that cash flowing in your business -- keep your business up and going and running smoothly so that you can do what you do best -- run your business?
Okay.... got your attention?
Well, let me introduce you to a fast-growing source of cash for growth-oriented and cash-hungry small businesses -- factoring of accounts receivable.
"So, what exactly IS factoring of accounts receivable?" you ask.
Factoring is the conversion of a company's commercial accounts receivable into immediate cash by selling those accounts at a discount. With factoring you can get 70 to 80% of an invoice's face value wire transferred into your account within 24 to 48 hours of the invoice being issued and approved.
Better yet - factoring is not a loan! With factoring there is no interest to pay, nor principal to repay. No liability will appear on a company's balance sheet due to its factoring. A company simply sells one of its assets (accounts receivable) for an agreed-upon "fee" to obtain a more liquid asset (cash) thus self-financing it's own growth with debt-free funding. It's equivalent to when you sell your vehicle (an asset) to someone -- the two of you agree upon a price and the transaction is done!
Since factoring is not a "loan," funding is not based on a company's ability to repay the amount advanced. Rather, funding is based on the ability of the company's customers to pay what is owed the company for the purchase of the company's goods or services.
Unlike traditional funding sources, which require all the assets a business has available for collateral on a credit line, factoring is, in essence, a Receivables-Based Credit Line, which needs no other collateral. It is available to be drawn on when and as needed. In fact, a business can conceivably have a credit line with its bank with its other assets as collateral and a second credit line with a factoring company with the receivables ONLY as collateral! Interesting...?
With factoring, you can have cash on demand to meet seasonal demands, accommodate new and larger clients who may demand longer terms or use up any excess working capital you have on hand. Factoring, in essence, gives you the option of offering terms to your customers thereby helping you to increase your customer base.
Prior to the 1980's, factoring was used primarily in the garment, textile and furniture industries and was only otherwise available to "big business". At that time (as with many things), the terms and prices were much different than what they are today.
Due to the increased competition and visibility of this very viable financial tool, however, these have changed for the better. The terms and prices we see today make factoring a quick and viable alternative funding tool for small businesses nationwide so that they, too, can take advantage of this proven, debt-free and flexible method to effectively multiply working capital.
SOME HIGHLIGHTS/ADVANTAGES TO FACTORING:
1. No financials required -- MUCH less paperwork than traditional sources (oftentimes this can be done by fax or email and no personal "appearance" is required by the business owner)
2. Quick account setup - usually 5 business days (sometimes faster)
3. Usually can have 70 to 80% of invoice amount wire transferred to your account within 48 hours after approved.
4. No long-term contracts, you factor as much or little as needed.
Why don't YOU make this a year of growth and increased profits by using this financial tool to enhance your business!
Copyright (c) 2006 Cash Flow Connections
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