As a business owner, or advisor, it is important to consider various alternatives and oftentimes the most obvious path is the one pursued. Many times when a company is in need of cash flow the immediate thought is to pursue a credit line from a Bank or other financial institution. The first impression is to “get a loan” and use Accounts Receivable as collateral. This may be a possible solution; however, there may be an easier way and that is to “obtain factoring”. Let’s look at the reasons it may be easier and more efficient.
An accounts receivable is a transaction between two businesses whereby one business sells to another on terms. Payment terms can vary depending on the party’s agreement, but net 30 is typical. An accounts receivable (invoice) is sent to the buyer once the seller delivers the product/service. This invoice becomes an asset of the sellers business and can be sold in exchange for cash. Accounts receivable financing allows the seller to get a high advance in the form of cash, immediately by selling the receivable to a third party. This is called Accounts Receivable financing.
Every business needs capital to operate. There are a lot of small business bootstrapping it with personal savings, credit cards and loans from friends and family members. There’s nothing wrong with any of that, but at some point you will hit a limit. The problem is many businesses hit this limit and get stuck. They’ve tapped all of their resources and aren’t able to get a bank loan for one reason or another.
Fast A/R Funding is a well-established factoring company which has managed to retain the enjoyable customer service qualities often attributed to smaller organizations, while serving businesses of a wide variety of sizes and needs. As a result of our drive for long-term quality relationships with our clients, we provide a set of factoring services and benefits which we believe to exceed the value and benefits of the services provided by our competitors. These services go beyond simple invoice factoring or accounts receivable factoring.
Our drive for quality relationships is the very reason for the wealth of information available to prospective clients on our website and the full suite of tools available to our clients in their client portal. Such is the context for this week’s blog post and our discussion of factoring services.
The secret is out! Businesses large and small alike have found the overwhelming benefits of Accounts Receivable Factoring. Accounts Receivable Factoring, or “factoring”, is a form of asset based lending that can boost a company’s short term cash flow. It is not a loan; no debt is assumed by factoring, and the funds are unrestricted. Companies from large 500 Fortune Companies to small businesses averaging only a few employees make up the growing number who have had successful experiences with Accounts Receivable Factoring. These businesses have found that being able to pay off debt, purchase new technology, increase business growth by leaps and bounds, make payroll – virtually anything related to their business – has allowed for business opportunities in areas once thought weren’t possible to become increasingly attainable.
If you’re brand new to factoring, like a large percentage of our applicants and it hasn’t occurred to you yet, I promise you’re going to want to know the answer to the two following questions
- What happens when one of your customers can’t pay on an invoice you’ve sold to a factoring company?
- What happens when your customer won’t pay an invoice you’ve sold to a factoring company?
Factoring Agreement: Understand Before You Sign
“Cash is king.” You’ve heard this saying before because it’s true. While it may be overly simplistic, it has real practical implications, especially for small-to medium-size businesses. But what about expedience and convenience? Often it’s the combination of a cash injection and expedience that’s necessary to meet your business objectives. Waiting weeks for credit isn’t an option, and, spending significant time away from the business puts an additional strain on resources. Perhaps you’ve seen the Ford commercials in which Ford owners envision choosing between two good things, such as having a safe vehicle or a reliable vehicle but not both. At the end of the commercial, the actors determine that “and is better.” Obviously, they’re implying that you don’t have to choose between two good things if you buy their product and that you may very well not get everything if you purchase a competitor’s product. All humor aside, traditional business financing methods are often slow and tedious to secure, and factoring companies which don’t offer a full online solution simply aren’t providing the same convenience and expediency that you desire. Online factoring combines a great financial product with the speed and convenience afforded by online processing. Fast AR Funding’s online factoring doesn’t just provide cash, it also provides additional benefits that can make your business more productive and secure. If you’re concerned with the speed at which you can gain funding, then online factoring should be a serious consideration. If you’re not sure if it’s right for your business, then keep reading for some common business scenarios that may be applicable to your situation.
Factoring Accounts Receivable: Why Factors Require Personal Guarantees
If you’re reading this blog you are most likely a small to medium sized business owner or financial associate within a business searching for financing. You could be searching for an explanation why there are certain requirements when factoring accounts receivable. You might possibly just wondering why Factors require a personal guaranty.
AR Funding: Keeping Pace as the Economy Improves
There’s no doubt that the economy is growing. A few days ago, the Bureau of Economic Analysis released the initial estimate of second quarter GDP data. The Bureau estimates that real GDP increased at an annual rate of 1.7% in the second quarter of this year. This is up from 1.1% in the first quarter of 2013. All together, the economy has grown at an annual rate of 1.4% in the first half of 2013.