Receivable Finance - Some of the Secrets, Part 9
Posted by matthew begley on Thu, Oct 20, 2011 @ 02:41 PM
Receivable finance - Some of the secrets, Part 9
In today's installment of some of the secrets of receivable finance we will be discussing the importance of organizing your business as a corporation or limited liability company. We receive many inquiries every week from prospective clients that are organized as a sole proprietorship. We usually decline financing a sole proprietorship even if the company would otherwise qualify for a factoring facility with our firm.
The biggest reason we decline sole proprietorships for receivable finance is related to the details of Article 9 of the Uniform Commercial Code. Article 9 of the Uniform Commercial Code is the body of law that organizes how receivable finance companies take a security interest in the businesses that they finance. Being a sole proprietorship can make that process more time consuming and expensive for the receivable finance company.
In addition to making it easier to obtain external financing like a receivable financing incorporation has the following benefits:
- Corporate owners typically benefit from a limitation of liability including avoiding in some cases the personal responsibility of corporate debts.
- Incorporating increases your credibility with your vendors and your customers.
- It is easy to transfer ownership of a corporation allowing you to be more efficient in your capital raising efforts.
It has never been easier or cheaper to incorporate you business. I always choose to refer potential clients of ours to a firm called MyCorporation. They really know the details and can do everything on-line. Their website and user-interface is very well done and makes the process smooth. I encourage anyone who is in business and hasn't taken the time to incorporate to do so with www.mycorporation.com.
For more information about Fast A/R Funding's receivable finance program for small business please click the link below.
Please understand that this article is for informational purposes only, and that you should consult an appropriate licensed professional before making the decision to incorporate your business.