Factoring - A forgotten financing possibility, that can help companies finance?

[testingyou]

Hi, I have used this forum in a couple of months now, and found it very helpful. Thanks for a grate forum for us entrepreneurs.

I thought it must be my time to "give something back" :-)

I just finished developing a website guide about factoring and thought to share the knowledge I gathered. I have search this forum for factoring

and found a few old post. So I think it is in its place for me to post about factoring.

What is factoring?

Accounts receivable financing, also known as factoring, is a powerful financial tool that has fueled the growth and success of a number of

companies. Factoring enables companies to capitalize on their unpaid receivables by selling them to a factoring company for immediate payment.

With factoring, companies immediately get paid for their invoiced work from the factoring finance company, while the factoring company waits to

be paid by the customers. Factoring strengthens a business' cash position by shortening the time to get invoices paid to 48 hours and providing

the needed funds to meet current expenses and target new opportunities.

Factoring Benefits

As opposed to loans and lines of credit that require that the client have tangible assets and strong financials, factoring relies more heavily on

the financial strength of the clients' customer. This is a critical feature, since many new and small businesses do not meet the financial

criteria of traditional lending institutions. However, many small businesses have a roster of financially strong customers that can be leveraged.

Factoring empowers businesses to capitalize on their customer list, and provides them with a tool to transform outstanding receivables into

immediate cash, without generating debt. Since Factoring is not a loan, it is an ideal financial product for the following:

- New and emerging businesses including small and home businesses, consultants and solo-preneurs.
- Businesses with financially strong customers
- Businesses that are preparing to grow significantly
- Business with intangible assets (e.g. consultants)
- Businesses that do not want to take a loan

An additional benefit of factoring is that the factor usually assumes part of the clients' credit risk for the customer. This means that if the

customer becomes financially insolvent due to bankruptcy and does not pay the invoice, the factor will assume the loss. This is a critical

service for small companies who may not be able to afford the bankruptcy of a customer.


If you want to read more about factoring, your welcome to visit my website www.factoring.cc where you can read more details and guides, and if

you want give me critic about my webdesign :-)


I hope this has been helpful.


Best regards

[allysa]

great introduction.. your site is nice and simple, but your header text pixelized, make it smooth and add some images related to factoring.

Best of luck to your new business.

[jasaunders]

You don't discuss any of the disadvantageas of factoring.
There is a reason it is not widely used anymore by small businesses.

It is expensive; you give away a large share of your A/R, especially if you don't give the factor recourse. If you do factor with recourse, you not only give away a good chunk of your A/R, you are also still responsible for the clients that default.