Factoring is Here to Stay… Is your bank?

Factoring companies have existed for hundreds of years, and the concept of invoice factoring can be traced back to biblical times! So, what?

The point is: factoring is nothing new. And, in times when banks are closing left and right, doing the stock price name shuffle, and are in an overall unreliable condition, it’s nice to know there are companies out there depending on business practice instead of unpredictable markets. Factoring is not some new fan-dangled scheme promising the world to business owners. Invoice Factoring is a simple transaction that creates capital and provides resourceful access to operational dollars. There are circumstances when  accounts receivable factoring is not the solution, but for many small to medium sized businesses, it’s an old way to find new money.

A/R Factoring is a simple concept that goes 1-2-3.

1. Factoring companies facilitate payment for a business’ A/R.

2. Factoring companies collect payment for the factored invoices over the course of the invoice terms (30 – 60 days typically), in exchange for a negotiated percentage of the invoice volume.

3. The business uses payment from the factoring company to execute vendor orders, pay employees, produce bulk inventory and more.

There is nothing questionable about what factoring is or why it works. Market fluctuations do not drive factoring companies to the top of the business world, only to drop them into inoperable bankruptcy -  like we’ve seen with our banking structure. And last, but certainly not least, factoring invoices does not create debt. In fact – it can actually help businesses get out of debt faster! It’s these small truths that make factoring a timeless practice, and in times of struggle, and even recovery, invoice factoring is a great way to realize funds without visiting the local bank. Plus, the bank line stopped being fun when you were too old to get lollipops.

Back for more Thursday when I chat factoring qualification! See you then!