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Factoring
Factoring is arguably the most powerful financial tool
available to small business entrepreneurs whose companies do business
with other companies or B2B. That is because factoring
provides financing for invoiced sales to customers that have been
granted liberal payment terms of 30 days, 45 days, 60 days or longer.
Granting extended payment terms to customers is a text-book method of
winning new accounts from your competition. Unfortunately,
granting attractive payment terms comes at a price. It will have
a serious impact on your company's cash
flow. Simply put, the faster you grow your business by granting
terms of payment to your customers, the faster limited working capital
will be used up. There is a solution to this dilemma, however...factoring!
Once your factoring facility is in place, you
can readily offer new prospective customers liberal payment terms,
such as 45 days without worrying about how you will gather the cash
for weekly payroll . A tough act for most competition to follow.
How Factoring
Works
Each week you will sell your invoices for services performed or for
goods you have delivered to your factor who will
typically advance 80-85% of the invoice face value. After your
customer pays the account, based on the terms you have granted, your
factor will then send you the balance not initially
advanced on your invoices (15%-20%) minus a modest fee for
factoring services. Factoring fees are very modest given
today's economy. In fact, a 30 day factoring fee
is often less than if your customer paid his invoice with a credit
card!
You can find out
more about factoring and its availability for your particular
company by requesting our informative publication, "When Banks
Say NO!...the Small Business Guide to Factoring".
Its FREE, courtesy of Tallahassee Factors in the
Contact Us area
of our web site.
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