Need to increase cash flow in your business?
Factoring & Invoice Discounting may be a great option!
But what is Factoring & Invoice Discounting?
What is the easiest way to learn a new financial concept? Find a good (memorable) example of the concept in "real life". To help you learn the basics regarding Factoring & Invoice Discounting let's watch one of my favorite scenes in one of my favorite movies...Caddyshack! Take a quick look at the video below:
CADDYSHACK MOVIE CLIP - DANNY NOONAN & TONY
To increase your businesses cash flow using a Factoring Company, the following players are involved in a business transaction: 1) YOU (the small business), 2) YOUR CUSTOMER, and 3) INVOICE FACTORING FIRM.
In the movie clip, YOU are Tony (hard working guy doing everything it takes to get a new order from your customer). Danny Noonan is your CUSTOMER. The bottle of Coke is that order Danny desperately wants.
Danny doesn't have enough money to get that Coke does he...well...let's imagine that Danny had a nice cold frozen Snickers bar in his pocket that would thaw to just the right temperature in 30 minutes (representing an outstanding invoice from another customer that was payable in 30 days). If Danny had a Factoring Firm involved, he could sell that Snickers (invoice) to the Factor while it was hard as a rock (and cold as an iceberg), get an immediate cash advance, and then use that cash to buy the "raw materials" (pay employees, buy parts, etc.) necessary to fulfill the order from his CUSTOMER!
Ohhhhh...how Tony wants that Coke...we all want new orders to build our businesses and generate revenues and profits. Ohhhhh...how our customers can taunt us with new orders, but are slow to to pay us...thanks a lot Danny, you jerk...
Invoice Factoring Firms can really help increase and stabilize businesses cash flow, which can be a useful tool for growing a business. Our FAQ page has further illustrations regarding factoring and you can learn more about the basics there.
Or, feel free to download our FREE guide below on Electronic Factoring with our company Fast A/R Fuding:
I hope this example clarified some of the basics about Invoice Factoring for you!
