Big plans, no funds, money factoring!

Business keeps your mind and body on the move almost 24/7. You deliver goods and services everyday but collections could be as slow as 15 days or 30 days term. The idea of operating and meeting up orders from your delivery to collection time need adequate financing support or working capital. Loan applications are good sources of funds but takes time to obtain. The paper work for applying a loan is also exhilarating with all the requirements that you need to meet for eligibility. Money factoring is one easy technique to support your operations while waiting for your receivables collection dates. 

What do you mean by money factoring?

Money factoring involves third party acceptance of your receivables or company invoice to a customer at an agreed discount rate.

How does money factoring works?

The factor, third party, accepts your company invoice to a customer at a specified discount rate that would represent the risk and interest for the waiting period. Factoring is common among small to medium sized companies with unlimited funds. The third party obtains the authority to collect to the firm that owes you money on collection date. You obtain cash through money factoring instead of waiting for the 30 to 120 days collection period. You need to inform and instruct customer to settle and issue payments directly to the third party or factoring company. However, some customers still prefer to issue the check and pay you because of obvious company policy. This might take you a little extra work but the boost of your cash flow for the operations is real and available for use.

The context of money factoring suits clean, uncomplicated debts, receivables, or invoices. The third party or factor assumes legal charge over the invoice, debt, or receivable. This reduces your risks for potential bad debts and keeps your system in order. Unpaid invoices or account receivables are a company's biggest asset. If you have a good client base, then you can ultimately consider money factoring and negotiate on fees and discount rates with your factoring company. Factoring eliminates the idea of borrowing from other sources.

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