All entrepreneurs are aware of the significance of cash flow to keep a business running. Factoring accounts receivable, invoice discounting and related services ensure that a healthy cash flow is maintained.
Factoring accounts receivable is a highly flexible and trouble-free method to uphold a steady cash flow. It can also be highly beneficial if your broker manages to get a good deal for you. Once the sale goes through and the invoice is raised the merchant provides the factor with an invoice and can get an advance up to 90% of the invoice value. The Factor will then collect the receivable amount from the debtor, deduct the 90% advance amount and their fees and handover any remaining balance to the merchant. Factoring financial services not only helps you to maintain an accelerated cash flow but also works as an effective professional credit control department.
Factoring Accounts Receivable
One of the most crucial financial services provided by a factor is factoring accounts receivable. It is basically the same as invoice factoring. Your factor will buy your business invoices outright and pay you cash for them. This is not a business loan. If you are a merchant doing business with other merchants that makes it even easier to get your invoices factored. Factoring accounts receivable would probably be one of the easiest and quickest ways to accelerate the cash flow in your business.
Every merchant experiences the common struggle to conquer sufficient funds to finance their business growth and meet working capital shortages. While it is often difficult to get business loan or qualify for other similar financing options, Factoring accounts receivable is definitely an easy way to arrange for funds.
The Brightside to Factoring Accounts Receivable
1. If you decide on Accounts receivable factoring, you are actually outsourcing your collections department. This frees up resources to be invested in more productive purposes.
2. Factoring accounts receivable allows a company to free up capital tied in inventory and makes more working capital available to the business.
3. Factoring accounts receivable is probably the quickest form of getting finance. You don’t need a business plan or any other financial document or tax statement to get an account receivables funding.
While the cost of Factoring your accounts receivables may vary anywhere around 5% your factoring broker can actully help you to find out a better deal and negotiate terms with the factor to ensure that you pay the least for your factoring financial services.