There is a form of debt-free business financing, without losing ownership or control. It’s very fast and still available. This is the only financial form that grows as fast as the invoice. There is no minimum time in business needs or guarantees. Personal credit or client companies are usually not important. Previously Liens was not a problem, as long as they were disclosed in advance. (Factors do not like surprises. The agreement that can work may die if the contribution of the factor appears to liens that is not disclosed.)
This financial form is called factoring. Say your company (client) provides products or services to customers, then issuing invoices for these items or services. Customers often take 30-90 days to pay invoices. Instead of waiting, the client can sell invoices to third parties, called factors. This factor will verify that the invoice is valid and that the customer has the willingness and ability to pay.
Factors will pay invoices in two parts. Initially, he would pay the client to the face usually 70-80% of the invoice nominal value. This usually takes less than 48 hours. When the customer pays, the factor will reduce costs, and restore the balance to the client. These costs are largely influenced by extraordinary invoice time.
There are many benefits to factoring receivables for client companies. The most obvious is that the cash flow immediately improved. Factors also provide other benefits as part of their normal business, such as handling collections and tracking accounts receivable. Factors can provide quality assurance when they verify that customers receive products. Another benefit is that the factor will verify customer credit before advancing funds. If you want to do business with new customers, but these factors will not fund their invoices, you will be very careful with the provisions you offer to them.
The factoring levels tend to be higher than bank interest rates, but when considering costs, it is important to consider the benefits too. Having cash to bid more work or utilizing discount suppliers can make a big difference. The aim is to produce more money by factoring than you if you do not take into account it.
Factoring has changed a lot over the past ten years. There are 5-10 times the source of funding now because there is that time, it is a far more competitive tariff and term. There is a $ 500 / month invoice volume factor to more than $ 10 million / month. There are factors of all sizes that specialize in the construction and medical industry.
Because there are so many funding sources, your best bets are using an independent broker. Most brokers do not charge clients. They paid reference costs by funding sources because funding sources are extraordinary people (many of them are very good, actually) and because it’s cheaper for them than advertising. There is little difference in the level of reference costs between different funding sources, so that finding the best compatibility between client needs and funding sources is the main concern.
