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What You Should Know About Factoring

Some of the things you really need to know….and why is it important to you. “Factoring” has become the alternative business financing tool of choice! Let me explain why…?

What you should know is “Factoring” has become a much more common means of providing a company with access to working capital – more and more small to mid sized businesses are discovering the many benefits of “Factoring” and are now taking advantage of this valuable financing tool. Why? Since 2008 access to credit for small business owners has become next to impossible.

It has become more challenging for small businesses to obtain traditional credit lines than ever before. Many lenders reserve these facilities for only their “best” customers, which are often defined as those who have strong profits, increasing revenue trends and high balances on deposit. Financing may still be available to these strong companies who also have “hard assets” to pledge as collateral.

But, as I am sure you have heard from the news – due to the ailing economy these strong companies are far and few between. In other words, if you own a business with good profits and stable revenue trends and have equity in a commercial building filled with valuable equipment, you may qualify for a small business loan.

However, if a business owner operates out of rented space. leases most of their equipment and does not stock a lot of inventory winning a lottery probably carries better odds than receiving a small business loan. Under most factoring relationships, the factoring company does not consider the financial condition of the small to mid sized business in their approval process – they strictly focuses on the credit quality of their customers and the length of time it takes them to pay their invoices.

The more creditworthy the small to mid size business’s customers are the better their factoring rates will be – and the great thing about Factoring is it is NOT a loan, it is quick, convenient and extremely flexible.

While many business owners are beginning to utilize the many benefits associated with “Factoring” to increase their cash flow to help them grow or survive.

The statistics show that less than 10% percent of North American businesses utilize a “Factoring” facility..Why? Because they simply don’t know that this unprecedented cash flow tool exists.