Archive for: June 2010

After long negotiations your business finally makes a huge sale. You look forward to building a relationship with this large client. However there is one catch; they want 30 day terms.

This could potentially be troublesome for the finances of your …

Factoring can be a perfect way to finance business growth for a number of reasons. It can solve cash flow issues, the funding grows with your sales, the funding is flexible, it doesn’t add to your overhead, etc. However, a …

There are business forums all over the internet, full of people with good ideas that just need funding to get things moving. Most are hoping for an angel investor to provide them with the funding they need. This is one approach as Angel investors they can be utilized for all types of businesses; it is the “one-size-fits-all” financing method.  However angel investors are hard to come by and are not the only way to secure funding. There are many creative ways to fund businesses that are unique to a particular business model. Knowing what types of financing are available may help you receive the funding you are looking for.

Great break down of factoring. Informative, concise, and easy to understand. If you are not familiar with factoring, this is a great introduction.

Factoring tends to be widely misunderstood. It is not a ‘traditional’ lending arrangement and most businesses owners have limited exposure to factoring, if any at all. Because of this, there are many myths and misconceptions about factoring I hope to dispel here.

Myth #1

The most widely accepted myth is that factoring is too expensive. There is some truth to that statement; 2 to 6% over 30 days is a lot. However, there are many ways to offset this cost. Using the funds to complete deals that otherwise would have not been financially possible is the best use of factoring funds. In this case you are increasing your profits as a direct result of factoring. If your business is already at capacity and cannot take on new sales, it means your business needs to grow. Factoring is ideal for growing companies as it provides flexible financing that grows with your business. Factoring funds can be used to purchase new equipment, hire new employees or open a new location, all of which can increase your long term profits. Factoring can also allow you to take advantage of volume and/or early payment discounts which can affectively off set the factoring fees. Bottom line is when factoring funds can be put to good use, it is expensive not to factor.

Generally speaking, the biggest hurdle in financing a business is finding the money to get it started. The next big financial challenge for most businesses is finding an effective way to finance growth.

Growth can come in many different forms such as a new location, a bigger office, more equipment, more capacity, increased inventory, more staff, new products and/or services etc. Further, each business tends to be in a unique financial situation in terms of what different types of funding they can qualify for, which makes matching financing to growth requirements a complicated process.

Potential clients often think that because they have a collections agency, they don’t need Factoring. While this might be the case, it is important to note that factoring is a completely different process with different goals, different benefits and should be used for separate purposes.

The only similarity between the two services is that they function to help businesses receive payment on accounts receivables. However they achieve this end through completely different methods.

One benefit of factoring that is seldom mentioned is that factoring offers dependable money.

What I mean when I say “dependable money” is that factoring allows a business owner to know exactly when payment will come in.

Even with the most …