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7 Good Reasons To Factor Your Way Into A Positive Cash Flow Position
By admin | February 24, 2008
Factoring is the selling of your invoices for cash rather then waiting 30, 60 or 90 days for payment from your customers. Factoring companies factor invoices from Corporate, Federal, State, City or Utility Companies. Very few factoring companies handle consumer factoring. For this, retailers are using the Credit Card Receivables methodology. And even fewer Factoring Companies factor Government contracts.
Seven Great Financial Reasons to Factor:
1. Factoring increases Cash Flow without increasing or adding debt.
2. The factoring process is fast and easy to qualify for. Your credit nor your companies credit is an issue. The Finance Company is only interested in YOUR client’s credit.
3. Different companies use different procedures to factor invoices. The larger more sophisticated companies wire the monies right into your business checking account and you can use the funds like an invoice line of credit.
4. Adding capital to your business that is not a loan or a liability is a unique financial trick that factoring provides.
5. Provide yourself and your business with a consistent weekly cash flow to allow for less stress and better planning.
6. Many of the larger Factoring Companies provide Professional Accounts Receivable Management. This means they provide a collection services as well as a screening service for your new and potential clients. After all, they would not want you to become legally involved with a company who has a history of paying invoices 60 days late. You won’t have to spend time nor pay a clerk to chase invoices, all that is done for you.
7. All fees associated with factoring are tax deductible. This means that the Federal Government offsets the cost for you to factor your invoices. Fees are based upon the total amount of your invoices, how long before the invoices are paid and the particulars surrounding your client. Regardless of the fees, if they are reasonable, just remember, they are tax deductible!
History of Factoring
Factoring has been practiced for centuries. The Romans sold promissory notes at a discount as did the Phoenicians. The word “factor” comes from Latin, the language of Rome. It means “to do” or “to make.” The Pilgrims journeys to America were financed by advances from a Factor who provided the funds to pay for the journey. The Pilgrims repaid the money with earnings from America. Factoring to this day is an extremely common business practice in Europe whereas many American business men have never heard of it. This year alone thousands of businesses will Factor billions of dollars in accounts receivables, and they are doing it for profit, growth, and in some cases, their very survival.
Cassandra Ingraham specializes in locating Accounts Receivable Funding for Government and Corporate Invoices and can be found providing back tax services, online at http://www.taxeswilltravel.com
Tags: accounts receivable, cash flow, factor, Factoring, federal, fees, Financial, funding, Invoice
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Topics: Finance |