Small Business Factoring

Small Business Factoring

Small Business Factoring

Maintaining consistent cash flow is essential, yet challenging, for small businesses and start-up companies. Fluctuating production costs, economic factors, late customer payments, and increases in payroll can all negatively impact cash flow. Some entrepreneurs seek small business loans to bridge this gap. Unfortunately, taking out a traditional small business loan is complex, costly, and creates debt. Additionally, new small business loans can take weeks or even months to process and are highly dependent on business owners' personal and business credit and assets, making these loans very difficult to obtain.

Accounts Receivable factoring services (also called "invoice factoring services") are different. Unlike a loan, accounts receivable factoring does not create debt, nor is it dependent on business owners' personal credit history or assets. For a small business, factoring approvals are based the creditworthiness of a company's customers and the value of their related invoices, making invoice factoring a fast, accessible method of small business financing.

Through invoice factoring, the factoring company (also called a "factor") purchases its clients' invoices at a slight discount, typically providing funding within days. The factoring company then helps collect on those invoices, manage their clients' accounts receivable, and limit credit risk. Reliable, secure online accounts receivable factoring companies, such as those affiliated with Factors Against Fraud and the International Factoring Association, can also save their clients money by:Using advanced credit-screening tools, helping small business make better choices when extending credit to customers;Handling the small business' billing electronically, which reduces printing, mailing, processing, and personnel costs;And providing fast access to funds that would otherwise have been tied up in accounts receivable for months.If your company needs capital and you sell to creditworthy customers in the U.S., odds are, accounts receivable factoring services are right for you.http://www.articlesbase.com/small-business-articles/small-business-factoring-3670350.html

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