This is where Bibby Financial Services enters. They provided a $750,000 factoring faculty so that MOP would have the financial capability to complete orders and keep the clean up efforts going at full pace.

This is a prime example of how factoring can help a business’s cash flows. There is no doubt the MOP was working at full pace to move as much product as possible. However, this can create huge cash flow issues.  MOP will be forced to finance all production costs as well as the large purchases of raw materials that not only will be needed to replace the inventory that has been sold, but also anticipate materials needed to meet increasing demand. Meanwhile, MOP will also be financing their customers purchase for 30 days or longer. This can easily stretch the finances of a company and create a short term situation where too much cash is flowing out and not enough is flowing in. Without factoring, a fast growing company would eventually be forced to pass on potential business as they would run out of cash necessary to finance new sales. However MOP was smart and factored their invoices which gave them the ability to turn their 30 day debt into immediate cash. This is cash they used to finance sales, and meet the crucial demand for their product in the Gulf of Mexico.

Factoring is also an extremely flexible financial tool. This is important for MOP because there is no good way to anticipate how big this spike in demand will be or how long it will last. However, factors are only financing for 30 days. This means that the executives at MOP can adjust the level of financing they receive from their factor as conditions change.

Factoring provided the financing needed to keep the cleanup efforts in the Gulf going as well as helping a business capitalize on current conditions. This is a prime example of how factoring funds should be utilized. For more information on this story click here.

Factoring’s Role in the BP oil spill is a post from: Factor Direct Capital

www.youtube.com/watch?v=FbhwiBJnH7I

John Beaney on Factoring as a Cashflow Tool. is a post from: Factor Direct Capital

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 creditworthy, dependable customers, payment on a particular invoice typically has about a week of ‘wiggle room’ in actually receiving payment. It could come a few days early, it could come a few days late, and there is no way to know exactly when payment will come.  With customers that are less dependable, organized or prompt, this could turn into a few weeks or months of ‘wiggle room.’

Businesses should be prepared for this to some degree; it’s the nature of 30 day payment terms, but there are situations where the money needs to be there. Starting a new project, making payroll, loan payments, due taxes, rent, expanding business; the list goes on, but the point is that in all these situations the business needs to have the money in-hand and ready to go. This is easy when the business has plenty of cash but when money gets tight, fulfilling obligations can get stressful. Rather than hoping to get paid in time to meet payroll or rent, factoring can provide the assurance that money will be there when it is needed.

Money You Can Count On is a post from: Factor Direct Capital