Recently, we have seen Factoring thrown around as a way for businesses to collect on accounts receivable. Shortly after the economic crash of 2008, Factoring carried a negative connotation, because it was utilized primarily by businesses who were in dire financial straits and needed to sell off assets to make money. These days, Factoring Receivables is being used for everything from financing internal projects to generating immediate cash to satiate the growing pains of a new business.
Why Factoring Accounts Receivable?
Your business has good customers and they pay you. However, if their timetable for paying you is on a 30, 60, or 90 day stretch, then you may find that there are periods when there is a slowdown in your cash flow, and devoting more time to hunting down overdue payments will negatively impact your productivity on top of it all. Many business owners have heard of factoring, but few embrace the idea that those outstanding payments are assets that can be transformed into cash on hand by factoring your accounts receivable.
In these cases, many companies opt for Accounts Receivable Factoring, which is simply selling your outstanding invoices. The benefits of this are twofold: Firstly, when you sell off those invoices, you will be quickly receiving (within 24 hours) cash for the face value minus an agreed percentage with Eagle Business Credit. Secondly, those outstanding invoices will no longer be your problem, as the job of tracking down those clients and the outstanding amount will be our responsibility, so you can devote your time to growing your business.
So When Is The Right Time For Your Business To Benefit From Accounts Receivable Factoring?
In Need of Working Capital
Factoring receivables is more than simply a method for catching up on clients who are overdue in their payments. If your business needs immediate funding to finish off a project, or buy more raw materials, factoring your accounts receivable will give you the immediate funding your need.
Start Up Phase
Similarly, if you own a startup, you might find that you have a few large orders to fill, but that you are short on the funds needed to get the resources necessary to fulfill those orders. By taking advantage of accounts receivable factoring, you will get the necessary cash to get those orders filled for your clients, which will in turn help to grow your business.
In Need Of Short Term Financing
Factoring accounts receivable is a great short-term funding solution for businesses of any size that need to do anything from cover payroll all the way up to fulfilling large orders and even buying new equipment. If you want to see how factoring can help your business, speak with a financial consultant to find out how you can stop worrying about chasing down every dollar your company is owed, so you can focus on growing your business and those important projects you want to complete.