Any business can make accounts receivable factoring a part of their business plan. Businesses who choose to utilize a factoring company, known as a factor, often need an immediate advance of cash. Some businesses considering a factoring loan may not be eligible for a traditional business loan from a bank. Factoring also benefits businesses with small or no collections departments or businesses that are already considering using an outside company for collections.
Accounts receivable factoring, or factoring, provides a business with the option to receive an advance on their accounts receivable invoices from the factor, in exchange the business relinquishes their accounts receivables at a discount to the factor to collect. The business often receives a portion of the advance from the factor and then receives another the rest of the advance when the customers pays their invoice.
Similar to a publisher’s advance, accounts receivable factoring provides business owners the opportunity to grow their business without having to use capital created from customer generated income. Businesses may use this advance in a variety of ways including investing in the firm’s development or to pay back its vendors more quickly.
Accounts receivable factoring allows a company to proceed with fulfilling purchase orders and can be a powerful way to get capital needed to create other business growth. Employing accounts receivable factoring into a business plan is a great option for immediate cash, because it does not require collateral or a sale of the company’s equity, also businesses can apply for a factoring loan with only the customer’s creditworthiness being taken into account.
Consider factoring as an unique opportunity when making a business plan. It is a secure and flexible option to get the immediate needed cash. Discover how accounts receivable factoring can take business to the next level and provide a way to maximize efficiency and assume larger projects and accounts.