There are so many business owners that do not know or do not understand what factoring is. No matter the size of your business, factoring is a great way to secure a strong source of capital.
Everyday, we meet business owners that are just now discovering the benefits of factoring. After dozens of years struggling to manage cash flow, factoring is now their solution to stay on top of their finances and grow larger than ever before.
To help you become like the many business owners we meet every day, we have created a short, but comprehensive guide to the many factoring services that can completely transform your business.
Types Of Factoring
Although there are many types of factoring, they all have the same general purpose; to get your business cash for its outstanding invoices.
Non-Recourse Factoring – Non-recourse factoring is the best, and most beneficial form of factoring to business owners. Non-recourse factoring allows you to sell your invoices to a factoring company without any credit risk. This means that if your client’s do not complete payments on their invoices, you will not be responsible for repayment – the factoring company will. This gives you risk free financing to help increase and secure your cash flow.
Invoice Factoring – Invoice factoring is the most, widely used form of factoring. A factoring company purchases your outstanding invoices to give you up to 96% of the total in just 24 hours or less. With this, you can save time, money, and efforts collecting unpaid invoices, while securing a strong source of income.
Accounts Receivable Financing – Accounts receivable financing is a line of credit secured by your accounts receivable. This is reserved for larger more stable companies.With this type of financing, you will need stability, good credit, as well as good account debtors. Account receivable financing has much more flexibility – like a bank line of credit would be.
Small Business Factoring – With small business factoring, the factoring company can handle smaller amounts, as little as $2,000. This is beneficial for small businesses that need to secure capital for growth, without taking on more than they need.
Payroll Funding – Payroll funding allows your business to get cash to make payroll without adding debt. The factoring company will purchase your business’s outstanding payment contracts to give you up to 96% within 24 hours or less.
Spot Factoring – Spot factoring allows you to pick and choose which invoices you’d like to sell to the factoring company. This is a great option for businesses that need to recover from a large project without making a big financial commitment.
Credit Card Factoring – With credit card factoring, the factoring company establishes a system where your business gets cash advances on your future credit card sales.
Who Can Use Factoring?
Factoring can be utilized by any business that uses contract based payment with customers and clients. Factoring is best suited for established business that have reliable credit, but slow paying clients. Some of the many industries that we factor for are:
- Information Technology
- Oil and Gas, and more.
There are many aspects of factoring that can provide your business a wide variety of benefits. Keep checking back to our blog to learn even more about this beneficial type of business financing.