Category Archives: Factoring

Factoring a Cash Flow Solution for Small Business

Are you looking for business finance? Many SME’s who need funding begin their search by looking for a business finance loan or a line of credit. Although secured business loans and LOC are well known products, generally your bank will require property as security, which can make it hard to be approved. Your property security maybe at its limits or you just don’t want to risk the family home. Factoring finance facility maybe a good alternative.It is generally an easier form of finance to obtain.

There are several conditions that can determine whether factoring is a solution to your cash flow problem. 1. Are your customers slow payments hurting you? Are they slow payers and take more than 60 days to settle your account? 2. Are missing out on other opportunities because you lack working capital? 3. With the correct funding,does your business have room to expand? If you answered yes to these questions, then you might want to consider invoice factoring as a way to increase your cash flow.Invoice factoring gives you nearly instant funding based on your business turnover.It helps eliminate slow payment cycles and provides you with cash to meet your overheads.

Because factoring is connected to your sales turn over, it does not have the same qualifing criteria that the conventional business loans have. The more your turn over increases, the more financing you may qualify for. This is a great fit for a business with growth potential. Factoring (or receivable factoring as it is also called) is easy to setup. Once you have billed your suppliers,you then send a copy of the invoice to the factoring company. The factoring service provider, in turn, advances you up to 90% of your invoice and is paid by your customer at the end of the 60 day period. Once your client pays the invoice, the company deducts theirs fees and you received the balance of the invoices.

The benefits to your business, by using this finance product helps to eliminate the slow payment problem. You increase your cash flow, enabling you to pay your suppliers on time, take advantage of new opportunities to expand and grow your enterprise. In terms of cost, factoring can be a very competitive alternative to business overdraft or a secured business loans. Factoring costs range from 1.5% to 3% per month, making it an affordable product. If your business has growth potential but slow payers create a strain on your cash flow and the potential to grow your business, be sure to consider invoice factoring.