Factoring: A creative way to finance your business

Factoring: A creative way to finance your business

Accutrac Capital 24-Mar-2011 0 Comments

Factoring is indeed a creative way to finance your business. Factoring is a form of financing that is well suited for a business that lacks working capital. Businesses in transition (that may be losing money), high growth businesses, or ones that are in a start up phase that may have trouble getting financing from traditional means can all benefit from factoring.

Factoring receivables is a transaction wherein a business will sell its accounts receivable (or invoices) to a factor (or third party) at a discounted rate in exchange for instantaneous money that can be used to finance the business and help to ensure the ability to continue business. This is better than a bank loan in a few ways. Most important though is the fact that your business credit is not involved and the value of the receivables are the basis by which money is received. This is in fact not a loan at all and is merely the buying and selling of an asset (such as invoices.) Unlike a bank loan that involves two parties, factoring receivables relies on three separate parties.

Receivables financing (or factoring) can be a great way to generate cash flow without having to take out a loan. In fact the source of your financing actually grows automatically with each of your sales. Recourse Factoring is the best type of factoring. This is ideal for a business that has a good credit profile, but will in the end be slower when it comes to paying back. You can even get up to 90% of invoice amounts within a single day from Accutrac Capital Solutions.

Factoring is a legitimate, well trusted and very effective method of financing. Companies have been using this for years to get the kind of money that they need. This can truly be a good way to facilitate meeting all of your financing needs without having to fill out loan applications and wait for approval. Recourse factoring has been around for a long time and has been one of the top means of finance for certain types of businesses.

There are some fees associated with doing this. Commonly they are based on the amount of time it takes a business’s customers to pay. Fees range from 1.5 to 2.5% per month of the amount of the invoice. Having to pay a 2.5% fee can really be worth getting 90% of your money up front without having to wait for your customers to pay. If you think this may be the right thing for you then you should call Accutrac Capital Solutions as soon as possible, the quicker you do the quicker you can get your money.

There are a myriad of financing options out there for those willing to think outside of the box. If you need to spend more time thinking about your business and less time thinking about credit management factoring can really help you out. Traditional financing options often require you to jump through a lot of hoops and can take forever to actually come through; if at all. If you have a viable business and manageable resources the money you need is not far away.

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