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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 …

Net 30 days terms are great for retailers, especially if they can move inventory quickly. How does selling something and counting your profit BEFORE you pay for it sound? For businesses with this blessing, it means low capital requirements. However this good financial situation is at the expense of their suppliers who end up carrying higher capital requirements because of these payment terms.

For larger more established businesses, these capital requirements are not much of a financial burden. They usually have enough cash on hand to manage the float time, and have avenues for financing if things get tight. On the other hand, upstarts tend to be scarce on capital thus making 30 day payment terms much more of a burden. The fact that upstarts usually cannot qualify for any traditional forms of financing exacerbates this problem. However savvy entrepreneurs have a tool to help manage this problem.