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 For many businesses, the investment in accounts receivable is one of the largest assets on their financial statement. However, that asset lies dormant until the time of collection when it is converted to a more usable form, cash. We would like to suggest you look within your own company and consider the resources you already have, namely, your accounts receivable.
You can easily turn those paper assets into spendable cash within 24 hours by factoring. Simply put, Factoring is the sale of your business' accounts receivable at a discount in exchange for immediate cash. Factoring enables a company to convert accounts receivable to immediate cash upon completion of a sale of goods or for services rendered.
When credit terms are extended to your customers, YOU are financing THEIR business. No interest is earned, and you lose the use of your money while waiting for your customer to pay. This is known as opportunity cost. This problem can be solved by Factoring. Factoring is a form of business financing which utilizes a company’s accounts receivable (invoices) to provide immediate cash for operating expenses and growth.
Factoring is not a loan. There is no debt repayment, no compromise to your balance sheet, no long-term agreements or delays associated with other methods of raising capital. Factoring allows you to use your own hard earned assets to create cash for the growth needs of your company today.
Regardless of the business you are in, factoring makes sense in today's highly competitive business environment. The additional capital factoring provides enables you to:
- Cover operating expenses
- Take advantage of trade discounts
- Control seasonal cash flow fluctuations
- Fund payroll
- Purchase equipment
- INCREASE SALES AND EXPAND YOUR BUSINESS
The most common form of factoring is consumer based and fits neatly into a wallet - the credit card. A merchant who accepts credit cards as payment, receives a discounted amount from the credit card company for factoring its sales.
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