Online Auction Platform For Receivables Offers Services Similar To A Factoring Company

Factoring is a very effective financing mechanism that allows many small and midsize

businesses to improve their cash flow by selling their account receivables. Now, these companies have another option for improving their cash flow and lowering their cost of capital-The Receivables Exchange.

This online auction site is not a factoring company. It is an electronic marketplace where Sellers list their invoices and Buyers compete against each other, bidding on the ones they want to purchase. While the underlying asset, accounts receivable, is the same, and both allow businesses to improve cash flow, the transaction is entirely different, making it a flexible, transparent working capital management solution.

Because it is online, it is convenient and accessible from anywhere. Investment entities in New York can bid in real-time to purchase receivables from a mid-sized business in San Francisco or Cleveland. This electronic marketplace solution opens up the possibilities on a global scale for small and midsize business to not only quickly access liquidity, but to no longer be reliant on one source of funding.

A factoring company puts most of the control in the hands of the Buyer. They decide how much they will pay for an invoice. Also, the business oftenhas to list all of his accounts receivable with the factoring company. The factoring company buys the invoices and the account debtor makes payment directly to the factor.

Unlike the traditional factoring company, this new marketplace provides flexibility and puts the businesses (Sellers) in control of their cash flow, letting them sell their invoices on their terms, without personal guarantees or all-asset liens. Companies can choose which invoice to sell, control the terms and timing by setting auction length, minimum advance amount and maximum discount fee and maintain the relationship with their customer.

The Seller can watch the auction in real-time and monitor the activity as investment entities from around the world compete to purchase these invoices. The competition drives down the cost of capital. The best bid that meets or beats the Seller's terms wins the auction. Sellers can also set a "Buy Out Price" which when met instantly closes the auction and awards it to the Buyer who offered the Buy Out Price. If there is no winning bid, the auction is not sold.

Once the auction is closed the advance amount is transferred to the Seller the very next day. This makes the Exchange an attractive, flexible finance option that allows a business to immediately take advantage of opportunities that require quick action and capital. This cash flow flexibility is essential to growing a small to mid-sized business. In a world of big box stores and huge franchises, the smaller businesses have to be able to compete.

While they don't have the kind of working capital that a huge corporation does, they will never get there if they can't take some risks and grasp the opportunities that improve their position.This accounts receivable marketplace gives them the much needed advantage to compete on a larger scale.

by: Andrew Stratton

POST COMMENT

How to Stop Foreclosure Auction – What Can be Done? Using The Ups Telephone Number - How To Deal With Ups Customer Support Online Auction Tips To Help You Make Online Buying Safe And Easy Government Seized Property Auctions - Finding Them Online Tips In Participating In Online Government Auctions Lost Packages And Other Disasters: 10 + Reasons Why You Need To Know Your Local Ups Telephone Number Saving Money Through Auction Sites Online Last Minute Vacation Deals - Vacation Package Auctions The Drop Shipping Made Easy Auctions - How To Succeed - Part 4 Jewellery Shopping From Online Auctions Auctions - How To Succeed - Part 5 Scottsdale Auctions: How To Prevent And Identify Bidder Theft