Fri July 30 2010


Can Start-Ups Use Factoring?

To be successful in your start-up venture, consistent cash flow is the major issue to be addressed. To ensure growth in your business, there must be enough cash to meet your daily operational costs. Any start-up business typically has to depend on loans, but it is very difficult or almost next to impossible to secure loans from banks and other financial institutions, so start up firms have to look for other options.

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Factoring Companies  Purchase Invoices and Accounts Receivable

Factoring is one of the options that offer the much-needed fuel to the engine for your business. So let’s take a look at why and how start up companies can use factoring to keep the cash flow pumping. Factoring is a very simple and fast process and most factoring companies offer their services to all types of small business,  including start-ups. For these kinds of businesses factoring proves to be a boon.  Factoring is a financial tool that is directly tied to sales.  Factoring gives you up to 96% of the face amount of your invoice in cash.  The factoring company also takes responsibility for credit and collections, reviewing the credit worthiness of your customers and collecting when the invoices become due.  No more bad debt!  This enables you to concentrate on production and sales.

Factoring helps start ups build their credit ratings. With adequate cash flow new business have the advantage to pay their suppliers on time, which in turn may allow discounts for prompt payments. Factoring is not a loan, as it does not require any collateral, thus you are not in debt. This makes a positive impact on your balance sheet and helps get other types of funding as well.

Factoring is one of the best methods that can be used by start-up business to improve their cash flow. So if a start up has sufficient receivables and a good profit margin, it can definitely grow with factoring.

When Banks Say No, Factoring Companies Say Yes!

In recent months the factoring of invoices has been more popular than ever.  With the increased difficulty of obtaining a bank line of credit, many companies are turning to factoring. The factoring of invoices is a process where a company sells select invoices for an immediate cash advance. A major benefit of factoring invoices is that factoring is not a loan.

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You are simply getting an advance on what is already owed to you. Therefore, the qualification requirements for a factoring line rest mostly on your customers credit ratings. Speed and flexibility are key elements to the factoring of accounts receivable. A factoring account can be set up in a fraction of the time a bank would take to approve a loan. Once your account is set up, you can receive 24 hour cash advances on select invoices that you choose. There are thousands of small to medium sized businesses that rely on factoring every day to make payroll, pay suppliers and stay above water in an unsure economy. The end of the year has almost arrived and we hope that businesses nationwide explore the benefits and rewards of factoring. America’s Factors, Inc. is always happy to answer any questions and we offer a free, confidential analysis of your financial needs. America’s Factors, Inc. cares about its clients and strives to provide unsurpassed service and attention as part of a 40 year old tradition.