Factoring companies may not be in the spotlight today, but tomorrow is Election Day and small businesses are on the minds of politicians and voters alike.

Small businesses are very much part of the American economy. Business owners represent the American dream in every sense of its existence, and economic policies and practices are at the heart of Tuesday’s election. With small business such a-buzz this afternoon, I thought I’d take today’s post to answer a few A/R factoring Q&As for the small business crowd.

When I talk factoring in my small business consults, there are always a few questions. The first is the most obvious. They ask me: Max, how does A/R factoring look on my business credit?

Great question! Credit should always be on your mind, but in the case of factoring, it’s really not much a concern. Factors are concerned with your invoices, and thusly your customers’ credit, not yours. See, since you’re not borrowing money from the factoring company, your pay-worthiness is less of an impact as your customers’ will be. And since you probably don’t extend net terms to unworthy customers, the credit issue shouldn’t create obstacles for your invoice factoring.

Another factoring question that pops up with small business owners: Max, how can I be sure factoring my invoices is a good idea?

When a small business is growing, often the bills will arrive sooner than checks. Invoice factoring is a simple vehicle that allows you to gain access to that billed money sooner than you would. And last time I checked, having cash flow is always a good idea!

Back for more factoring later this week, when I’ll discuss how factoring invoices can promote healthy operational activity in different industries.

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