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Why Factoring
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Every day many business owners hit a bump. That bump prevents them from growing their business, or at least, severely limits the speed at which they can grow their companies. Sometimes, and specially for small and midsize businesses, the bump appears to be insurmountable. That bump is lack of working capital. Let’s take a look at the most common source of working capital problems: extending payment terms to customers. Waiting months to get paid for your invoices can wreak havoc in your company’s cash flow, specially if you have to meet payroll, pay suppliers and pay rent. But what happen if your business can’t wait to get paid because it must meet its obligation?
Factors make funds available, even when banks would not do so, because factors focus first on the credit worthiness of the debtor, the party who is obligated to pay the invoices for goods or services delivered by the seller. In contrast, the fundamental emphasis in a bank lending relationship is on the creditworthiness of the small firm, not that of its customers. While bank lending offers funds to small companies at a lower cost than factoring, the key terms and conditions under which the small firm must operate differ significantly. Bank relationships provide a more limited availability of funds and none of the bundle of services that factors offers.
Factoring is an effective form of business financing in which you sell your invoices to a factoring company in exchange for immediate payment. It eliminates the 30 to 60 days that your customer take to pay your invoices and provides you with working capital you need to run your business.
To learn more about Factoring visit us at www.williams-wolf-associate.com
www.williams-wolf-associate.com Capital Solutions! When you need them Most. |
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