Need Financing? Look at your books

Small businesses are prone to getting strapped for cash. Although it is first instinct to look for sources of outside funding, looking within might provide a faster and more affective solution.

You might be thinking, ‘are you crazy? Where can I find cash within my business?’ Take a look at your books, specifically your accounts receivables. Would having 80 percent of that balance today put your business back in good standing? Then invoice factoring is the solution to your business’s cash flow needs.

Factoring is effectively the sale of an asset. Accounts receivables are simply a future cash flow that a factoring company will purchase at a discounted rate. In exchange for this discount, the business receives immediate cash flow for use in their business. As well the factoring company will assume the invoice as there own and thus will provide accounting and collections services, as well as a package of other benefits.

Because factoring is the sale of an asset, it creates no new debt. This is apposed the business credit lines and loan arrangements that create a liability. The factoring company gets paid back by your customer which means there is no added liability for your business.

Another key characteristic of factoring that it provides fast access to capital. Banks have to go through many processes ensure that their clients are credit worthy before they approve a loan. Factoring companies require due diligence as well, but their process is much more streamlined and they can usually disburse funds 24 to 48 hours from the time of application. This means that your cash flow worries can be over ASAP and business can keep running as usual.