Factoring Companies are providing loan alternatives to companies in need of working capital
Receivables factoring is unknow to many business owners. What happens is the Factor Company buys your outstanding invoice and pays you immediate cash. This brings your company quick cash flow and allows for growth and taking care of other business expenses. Often business owners use the quicker cash flow to pay suppliers sooner and take supplier discounts. When this strategy is employed a significant portion of the factoring fee can be offset.
A factor company offers working capital approvals when banks cannot approve your line of credit. Most banks ask for outside collateral and perfect personal credit which is not the norm for most small business owners. With Factoring Companies you get your appropriate share of funds by selling your outstanding invoices. Another nice feature is that a good factoring company can make a decision on the financing within a day or so while banks often take weeks to make loan decisions.
Factoring invoices makes things simpler for your business during your periods of cash crunch. Factoring accounts receivables was created to provide quick means of cash to your business model. There are many Factoring Companies in the market and it is necessary for business owners to select the best fit for them. The best factoring companies do not ask for all the bank documents such as financials and tax returns. If your dealing with a factor asking for all these items this should be a red flag to move on to a traditional factor that only requires you have customers with good credit risk.
Now that most banks are not providing business loans to companies that do not have established credit it's making factoring a viable growth tool for America's small business community.