When you do business, it is when commercial or government customers? If yes is your answer to that question, then that means that you are used to writing up to 60 days to get your invoices paid as well. One of the most challenging facts of doing business with big companies is that they pay slowly. Even though they do pay, they would take their own sweet time to do it.
But you have expenses that you have to pay now. You would have to pay the suppliers. There's payroll that should be met. This creates a big challenge for small and medium sized businesses.
Is the solution a business loan? Not usually, no. They are hard to get. Because you can only get one loan at a time, your hands are tied until the loan is paid off when you do get them. So if you need more money because your business grew, then you are out of luck.
Factoring your receivables is therefore considered a better solution if your biggest headache is slow paying customers. Receivable factoring provides you the necessary financing to pay employees, suppliers and taxes. Above all, it provides you with peace of mind by eliminating (or at least minimizing) your financial worries.
Working on a simple premise is receivables factoring. Your invoices are valuable assets that can be financed. Basically, this would mean that for your slow paying invoices, the factoring company advances you money and waits until your customer pays. Of course, they charge a small fee for this service. This is how it works.
As usual, you do your work. You then submit a copy of the invoice to the factoring company for financing when you bill your customer.
The factoring company provides you an immediate advance on 70% to 90% of the invoice (there is a 10% to 30% reserve). That money can be used to meet payroll and to pay expenses.
Waiting to get paid by your customer is the factoring company.
Once they are paid, the transaction is settled and the factoring company rebates any reserves
You will notice that with factoring, you will be given immediate money for your slow paying invoices and also enable you to run and grow your business. Qualifying for factoring is really easy. Considered as the biggest requirement is to do business with credit worthy customers. So, if your customers are good (but slow paying), you can finance them.
In order to finance your business and grow it to the next level, receivables factoring is considered as a great tool.
But you have expenses that you have to pay now. You would have to pay the suppliers. There's payroll that should be met. This creates a big challenge for small and medium sized businesses.
Is the solution a business loan? Not usually, no. They are hard to get. Because you can only get one loan at a time, your hands are tied until the loan is paid off when you do get them. So if you need more money because your business grew, then you are out of luck.
Factoring your receivables is therefore considered a better solution if your biggest headache is slow paying customers. Receivable factoring provides you the necessary financing to pay employees, suppliers and taxes. Above all, it provides you with peace of mind by eliminating (or at least minimizing) your financial worries.
Working on a simple premise is receivables factoring. Your invoices are valuable assets that can be financed. Basically, this would mean that for your slow paying invoices, the factoring company advances you money and waits until your customer pays. Of course, they charge a small fee for this service. This is how it works.
As usual, you do your work. You then submit a copy of the invoice to the factoring company for financing when you bill your customer.
The factoring company provides you an immediate advance on 70% to 90% of the invoice (there is a 10% to 30% reserve). That money can be used to meet payroll and to pay expenses.
Waiting to get paid by your customer is the factoring company.
Once they are paid, the transaction is settled and the factoring company rebates any reserves
You will notice that with factoring, you will be given immediate money for your slow paying invoices and also enable you to run and grow your business. Qualifying for factoring is really easy. Considered as the biggest requirement is to do business with credit worthy customers. So, if your customers are good (but slow paying), you can finance them.
In order to finance your business and grow it to the next level, receivables factoring is considered as a great tool.
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