You’ve determined you’re going to use accounts receivable finance to unlock cash available in a business invoice or pool of invoices. So now, how do you ensure you choose the right factoring program for your company? Here are three simple steps to remove much of the hassle associated with making the wrong choice and going with the wrong firm.
As 2012 draws to a close it’s time to reflect on the past year’s events. There are a lot of small business owners out there who are able to sit back with a sense of relief, saying:
Despite being around for centuries and being used across practically all industries, there are a lot of misconceptions about the factoring loan. Much of this misunderstanding comes from not being familiar with this type of financing. In fact, factoring isn’t all that different from many other types of short-term business loans.
If there’s one thing I’ve learned during my tenure in the commercial finance industry, it is that there are all sorts of business management styles. What I mean is, there are small business owners who have a handle on their business’ financial side and there are others that don’t. Improving cash flow is on the radar for both types.
When you think about business funding what comes to mind? A loan from the bank? Tapping personal credit cards? Using your own savings? Some kind of specialized cash flow financing?
Tags: Business Loans, Accounts Receivable Factoring, Small Business
Running a small business is challenging. There is usually more work to go around than there are people. With so many things to do, micromanaging cash flow isn’t at the top of the list. Yet cash flow is vital to the growth and success of your business.
In business, receivables are both a curse and a blessing. A growing accounts receivable balance means that you’re making sales, but receivables are just numbers on paper until you collect the cash.
There are many factoring companies that specialize in truck factoring, or financing transportation companies. The truth is that most of them do a really good job, providing a professional, honest product. Do some research on the International Factoring Association website, www.factoring.org, to find this solid, core group of factoring companies. Companies looking for a new factoring company should ask their associates in the trucking industry for referrals to companies that have done truck factoring. Once that group of factoring companies has been identified, then it’s up to you to research which firms have the characteristics you value the most.
Business owners often ask me to define factoring for them. I quickly explain it to them, but after doing so, I usually ask them why they need the cash. There is a lot to be gleaned from the responses I hear back. These responses determine if the company in question has a short-term cash flow need, or if a long-term gap in working capital is likely.
