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Factoring For Growth

For most American small business owners, the “Great Recession” has been a challenging, often crippling time for their companies. Fortunately, current economic indicators show that the American economy is on the mend, a trend mirrored in the expectations of entrepreneurs throughout the country. In fact, according to www.gaebler.coma recent Administaff survey showed very encouraging numbers:

The Business Confidence Survey, conducted by Administaff, found that 47 percent of small business owners thought that the economy would recover before the end of the year, while 21 percent said they … [expected an upturn] before mid 2011. Thirty-two percent of those surveyed said that they weren't sure when the economy would be back at full strength.

The survey also found that, compared to the same time last year, average salaries had risen by 3.2 percent, bonuses were higher by 14.9 percent and commissions were up by 8.1 percent. The leader of Administaff said that the statistics showed that while the mood is improving, many small business owners were still cautious.

"Owners and managers of small and medium-sized businesses are seeing signs of improvement in sales but remain cautious in their economic expectations," said Paul J. Sarvadi, Administaff's chairman and chief executive officer. "However, many have hopes the election results may lead to a more favorable business climate and increased predictability for their businesses."

As the economy continues to recover, American businesses have a unique opportunity to grow their businesses as a way of preparing for the future. One of the simplest ways of doing that is through accounts receivable factoring.

Accounts receivable factoring services, often called “invoice factoring services” are a useful method of small business financing that enables business owners to budget and plan better by creating consistent cash flow. The small business sells its invoices to the factoring company at a small discount. The factoring company, in return, pays the small business, usually within a couple of days. This means that instead of waiting 30 to 90 days for customers’ payments, the small business has its funds almost immediately.

Additionally, accounts receivable factoring enables small businesses to save money on their in-house accounts receivable work. Reputable factoring companies, such as those affiliated with the International Factoring Association and Factors Against Fraud, provide not only funds, but also help collect on invoices and manage accounts receivable. The factoring company handles all the billing, reducing printing, mailing, and personnel costs. As well, the factoring company provides access to advanced credit-screening tools to help small businesses decide how much credit to extend and to whom. This minimizes credit risk, again saving companies money.

The time and money small businesses save by using invoice factoring services are resources that can be put into growth opportunities. New equipment, staff training, marketing campaigns and other growth-oriented costs are easier to plan for and pay for when a company knows what its monthly budget will be, as it does with invoice factoring. The economy is improving. Will your small business be ready to meet the demand?

Disclaimer: The information presented above is general and intended for educational purposes only. It is not a substitute for practical legal or accounting advice on any specific situation.