Achieving Cash Flow Management Through Accounts Receivable Factoring
A lot of business owners find it difficult to keep up with the cash flow demands of their company. Whether you need to replace your aging credit card processing machine or simply have a large order coming in, account receivable factoring could be the answer. This is a process that not only provides you with immediate cash, but also helps you manage your working capital through accounts payable factoring and other sources.
Accounts Receivable Factoring is a proven method of using cash to finance your working capital. As an owner of a small business, you understand the importance of working capital and cash flow management. However, you may find that your business is not as liquid as you would like it to be. One way to take advantage of cash flow is through accounts receivable factoring. This is a process that allows you to access the funds tied up in your customers' accounts.
It is important to note that there are 3 main types of accounts receivable factoring:
1. Base Rate: A standing rate given by a factoring company, independent factor or dealer that's used to determine the amount of credit extended.
2. Prime Rate: The actual interest rate charged by the factor. Many factors offer a "prime" rate on top of their "base" rate, which may be higher than the prime rate charged by commercial banks.
3. Discount Rate: The percent taken off the invoice amount before factoring the invoice.
Factoring companies have different methods of providing their clients with accounts receivable factoring services, and it is up to you to select a company that best meets your needs. You can choose to go through an independent factoring company or a subsidiary of a commercial bank. Both are very effective in providing your business with financing for unpaid invoices, but each has its advantages and disadvantages.
Accounts Receivable Factoring
The key to account receivable factoring is the ability to pay off the invoice before it accrues any interest charges. Your interest rate will likely be lower than a bank would charge, and you will avoid the hassle of paying off your customer. The longer you wait to pay your invoice, the more interest it accrues—and that may not be what you want for your business. The purpose of account receivable factoring is to get money into your company as quickly as possible and without any additional cost to you. If you have good credit with a bank or other financial institution, this could be a viable solution for financing your cash flow needs.
Factoring
A factoring company purchases your unpaid invoices for an agreed-upon interest rate. The company's funds are then used to pay your customers and you are paid on the next invoice cycle.
Factoring is similar to accounts receivable factoring, only the debt is actually held by you rather than by a bank or other financial institution. It may be necessary as a last resort, after all other methods of paying off your receivables have been exhausted.
Inventory Factoring
When purchasing inventory, it's important that the credit facility you choose to use makes sure that the capital you receive is used for inventory financing rather than general operating funds. Inventory financing through factoring makes sure your business has the money it needs to maintain its inventory levels.
Factoring and accounts receivable factoring are both viable options to keep your business financially sound. Making the right choice will take some prodding, but if you do your research, you may find that it is well worth the effort. Patience and perseverance may be required initially, but in the end, factoring can help your company achieve success in today's challenging economic climate.
This is a very interesting article, where I found info on how to apply for Factoring.
https://factoring.com/faqs/find-a-factoring-company/#faqs-find-a-factoring-company
This is very interesting:
I am really surprised you don't get the ball rolling with issues like the ones described in this article. Don't be a "dumb donkey" and post this article to your FB page. You can find a lot of similar articles regarding income tax in Britain for instance, that hardly anyone reads anymore. I have read lots of books that have been published in the last 20 years about tax avoidance, However none came close to the detail that is given in this article. Also note: even though I do have debt and my primary residence was paid for with a mortgage, (remember "we are all slaves today"?) I had no interest on my mortgage or line-of-credit charges They would be here if they were allowed to be equitable. The government is just another financial institution and not an honest guardian of the law.
Amazing article. Thank you for sharing it.
This is a great article, I didn't know this until now. wish I knew about it sooner, as my husband and I are trying to save for a holiday next year and to pay our car note. This would be very helpful in paying off our debt quickly, as it wouldn't accrue interest over time. Keep up the good work!
Nice article on how to manage your working capital through accounts receivable factoring
My wife and I have been considering getting an account receivables factoring company and we have been watching these videos with interest. Check out this link to see if it can be right for you. http://www.accountreceivablesfactoring.org/ We are in the midst of a financial situation and this would help us get free from debt if we are able to get approved. This is the website I have been reading a lot of articles on lately http://www.accountreceivablesfactoring.
Conclusion
I am not a financial expert and certainly not a CPFA or CPFA review. I am just a regular guy doing my research on which to buy. This is just my opinion. Thanks for reading.
I have been teaching myself about what is going on in the world of real estate and I am finding an awful lot of information that is rather new to me, like this one article. I was stunned at the way they were banning wealth built over generations, even though it had absolutely nothing to do with them, but the documents that it required were so vague that it meant nothing after all these years was legitimate by anyone's definition of "legitimate" anymore.