Texas Factoring Companies: We Know Your Business

Good evening to all…….it’s hard to believe we’re more than half way through 2013.  As I look back on the year I think about all of the businesses that worked on improving cash flow.

I’ve worked with small business owners in a multitude of states including Texas, Florida, California, and New Jersey. 

If you’re a small business owner needing help with cash flow, then you’ve probably done searches for Texas factoring companies, Florida factoring companies or whichever respective state you’re in.

Then again……you may also still are trying to figure out what direction to go in terms of financing if you haven’t been able to obtain traditional bank financing.

The Solution………………

I have a simple solution to your cash flow dilemma.  Consider investing in a factoring facility.

Factoring is a form of small business financing, where you simply sell your accounts receivables relating to your credit worthy customers.

Advance rates vary, but are typically around 80%.  Once the invoice is paid, you get the remaining portion back less any applicable fees.

It is a great way to close the gap between when you bill your customer and your customer pays.

It helps loosen very tight cash flow and allows you to:

-        Pay your employees

-        Buy inventory

-        Business development

Factoring Strategies

Now that we’ve established what factoring is, we can discuss some simple and possibly cost effective strategies for factoring receivables.

• The first (and most simplistic) is factor all of your receivables.  Sure it’s going to cost a little bit, but it is a small price to pay to have the cash necessary to conduct your day to day operations (make payroll, pay vendors, etc.).

• Second, if you offer quick pay discounts, then you may want to either end the quick pay discount program or minimize them.  If you’re factoring your receivables, then you got the cash you need.  I make this recommendation simply because I have seen customers take the discount even if they are not paying in the required time frame. 

• Third, you may just need a little help from time to time with your cash flow.  You may only want to factor a portion of your receivables.  Look at factoring your more credit worthy customers.  There may be a chance the more credit worthy customer pay faster.  That’s okay, because In the long run you are minimizing your factoring charges while meeting your cash needs.

What You Should Know…..…….

There are so many things that a business owner needs to know about factoring.  This includes business that are looking for Texas factoring companies.  What I’d like to do is outline what I feel are the most important things you should know regarding factoring.

• Bridging the Gap:  Factoring really helps bridge the gap between when you bill your customer for products or services and when the receivable is collected.  Many companies will work really hard to stretch payments to you.   Customers can pay upwards to 30, 60, and 90 days.  There’s no way you can adequately pay the bills if it’s takes them that long to pay you. 

• Accounts Receivable Management:  If you find that you’re having a hard time staying on top of your receivables, your factoring company also monitors your receivables (or the ones you factor at least).  They want to ensure invoices are paid as well.  In their due diligence process they at times find out if there are issues with invoices and can notify you rather quickly.

• Not a Long Term Commitment:  A factoring facility is considered short term financing.  If you look into investing in a factoring facility, then you’re not looking at a long term commitment to a bank.

Really, if you’re searching for factoring companies in your respective state (Texas Factoring Companies,  Florida factoring companies, etc…..) make sure you thoroughly understand terms and conditions, pricing etc……..  Hopefully this has helped make your decision as to a whether or not you invest in a factoring facility a little easier.