subject: Receivable Factoring To Finance Your Business [print this page] How you tried doing business with government or commercial customers? You are also used to waiting up to 60 days to get your invoices paid as well if your answer to that question is yes. One of the most challenging facts of doing business with big companies is that they pay slowly. They take their own sweet time to do it but they do pay all right.
But you have expenses that you have to pay now. There are suppliers that you have to pay. There's payroll that should be met. This creates a big challenge for small and medium sized businesses.
Do you think the solution for this is a business loan? Not usually, no. They are quite difficult to get. And when you get them, your hands are tied until the loan is paid off, since you can only get one loan at a time. This means that you are out of lick if your business grows and you need more money.
If slow paying customers is your biggest headache, then a better solution would be to factor your receivables. In order for you to pay employees, suppliers, and taxes, receivable factoring will provide you with the necessary financing. Above all, you will be provided with peace of mind by eliminating or at least minimizing your financial worries.
When it comes to receivables factoring, they work on a simple premise. Your invoices are valuable assets that can be financed. Basically, this would mean that for your slow paying invoices, the factoring company advances you money and waits until your customer pays. Of course, they charge a small fee for this service. Keep reading to learn how this works.
You do your work, as usual. You bill your customer but then submit a copy of the invoice to the factoring company for financing
Providing you an immediate advance on 70% to 90% of the invoice (there is a 10% to 30% reserve) is the factoring company. You can use that money to meet payroll and pay expenses
The factoring company is also waiting to get paid by your customer.
The transaction is settled once they are paid and the factoring company rebates any reserves.
As you can see, you will be able to run and grow your business and you will also be given money for your slow paying invoices because of factoring. Qualifying for factoring is really easy. Considered as the biggest requirement is to do business with credit worthy customers. This means that you can finance your customers if they are good but slow paying.
In order to finance your business and grow it to the next level, receivables factoring is considered as a great tool.
