Hurry up and wait. It’s common knowledge that clients always want business owners to hurry up and delivery their services – only to have them wait 30 to 60 days before invoices are paid. Giving 30 to 60 days terms to clients can have substantial implications for small and medium sized businesses, who simply may not be able to afford to wait for payment.

Unless a company has a substantial capital reserve, waiting for payments can be very difficult. There are businesses expenses that must be met – rent, telephone and supplies. There is also payroll, one of the most important businesses expenses that must be met – on time – every time.

If you lack the funds to wait, the obvious solution is to get business financing. This is easier said than done, especially in the current market. Qualifying for a business loan can be a long tedious and uncertain process. One alternative to business loans – at least in some instances – is to get and advance on your invoices using invoice factoring.

Invoice factoring is a simple financing process that provides you with an immediate advance on your invoices. Instead of waiting for your clients to pay, a factoring company advances you funds on each qualifying invoices. The transaction is completed once your client pays the invoice in full. The factoring company charges a fee for this service, which is usually based on a percentage of the invoice gross value.

Factoring has a couple of advantages over conventional business financing. A factoring company is in effect, buying your invoice for a discount (their fee). Because of this structure, they are more interested in the credit quality of your clients than in the financial strength of your company. This makes it easier to qualify for. However, your company must be reasonably well managed and free of any liens or encumbrances. The other advantage is that qualifying for factoring is a quick process – and can usually be completed in a couple of weeks.

Although factoring is not a cure-all, it’s an innovative solution that should be considered if your company cannot afford to wait to get paid on its invoices.

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One of the side effects of the economic crisis is that more companies need business financing while less institutions were willing to provide it. Because of this, companies started looking for other options to business loans. One of the options that has gained substantial traction in the last year is invoice factoring.

Invoice factoring is a form of financing that is often offered by factoring companies. It’s ideally suited for companies that are selling goods/services on net 30 to net 60 days, but can’t afford to wait for payment. This is a common problem since most medium sized companies have immediate expenses and don’t have the necessary capital to wait for payment.

Factoring companies solve this problem by accelerating payment of your invoices. They act as an intermediary who buys your invoices and pays you for them immediately. This provides your company with the necessary cash flow to pay operating expenses and handle new orders. The factoring company, which now holds the invoice, waits for your client to pay for the invoice and settle the transaction.

A factoring company usually buys your invoice in two payments. The first payment, called the advance, is usually 80% of the invoice. The remaining 20% is called the reserve and is held to cover any invoice discrepancies and potential underpayments. Once your client pays the invoice in full, the factoring company sends the second payment, which is the 20% reserve less the factoring fee.

Factoring fees are determined by the credit quality of your clients, the volume of financing that you need, your industry and invoice diversification. They vary in range but they are usually a specific percentage of the purchased invoices.

One of the big advantages of invoice factoring is that factoring companies consider the credit quality of your invoices to be your biggest asset. This means that medium sized companies that have a solid roster of clients can usually qualify. However, to qualify for factoring your invoices need to be free of any potential encumbrances or liens.

Financing any business in the current credit environment is extremely difficult. Banks and many financial institutions are retrenching their credit facilities, forcing companies to look for financing elsewhere. One of the business sectors that has been hit the hardest is manufacturing.

Manufacturing companies tend to be cash flow intensive businesses. They are constantly paying suppliers and employees. There are equipment, payroll, supplier and rental expenses to handle. Most managers (or owners) will do their best to keep up to date with these payments, or they risk getting their company into trouble. What usually gets cash flow into trouble is that most clients pay their invoices in 30 to 60 days. Basically, most owners need to pay suppliers before they get paid by clients. Therefore, unless the company has a cash reserve, it will run into problems.

This situation can be fixed with business financing. Unfortunately, getting a business loan is the current environment is very challenging. Business loans are simply not available to companies unless they have stellar credit and impeccable financials.

But let’s review the problem though. The issue is the timing difference between when expenses are made and when payment is received. If you accelerate the payment, the problem is solved.
How do you accelerate a payment? One way to accelerate a payment is to finance it through a factoring company. When you factor an invoice, you assign it to a factoring company who gives you an advance payment for it. This accelerated payment can be used to pay corporate expenses therefore alleviating the pressure on your cash flow. The transaction is settled once your client pays the invoice in full. Factors will charge a fee for their services, usually a percentage of the invoice.

In an invoice factoring transaction, the factoring company is buying your invoice, rather than lending your company money. Since the factoring company is buying your invoice, the commercial credit of your customer (who actually pays the invoice) is very important. Because of this, many companies with good customers can qualify for factoring financing, even if they are startups or have some financial difficulties.

Managing a company’s cash flow is one of the most important functions of a business owner during tough economic times. If done correctly, it will ensure that the business is there to thrive another day. If done incorrectly, it will jeopardize the business.

From a cash flow perspective, cash moves in only two directions. It moves in, when you make money. It moves out, when you pay expenses. Keeping this flow in balance is one of the toughest jobs in any business.

This problem is even more complex for companies that sell to other businesses or to the federal government. Large business clients usually expect to be given terms – which means that they will pay their invoices in 30 to 60 days. But as a business owner, you are usually presented with expenses that must be paid regularly. There is rent. There is payroll. And then, there are suppliers. All of which demand payment now. This difference in the timing of the flow of “cash in” and “cash out” usually creates a problem for business owners. If the business has ample cash reserves, the solution is simple. Pay the expenses now and replenish the reserves once a client pays. But what if you own a small business – or a growing business – and have no reserve? Then you must get business financing to cover the gap.

Most people think that obtaining business financing is difficult and requires a complex application process. While this is true for certain business loans, it is not true for all financial products. As a matter of fact, factoring, a product that is designed to deal specifically with cash flow problems, is fairly easy to get.

Factoring provides a simple solution. You sell your invoice to a factoring company, who advances you money for it. This reduces the time you take to get paid. The transaction is settled once your client pays the invoice in full. It’s a fairly simple concept.

As a matter of fact, you are selling the invoice to the factoring company, so usually factoring is not considered a business loan. Because of this, factoring is relatively easy to get, provided your company does not have any liens or judgments and provided your clients have good commercial credit.
Factoring financing is a little know solution that can help a company improve its cash flow and when used correctly, it can position the company for growth.

Invoice factoring is quickly becoming a mainstream business financing tool that being used by small, medium and large sized businesses. It has been gaining traction in part because banks have tightened their lending standards, leading company managers to look for business financing elsewhere.

Although most business owners are familiar with how business loans work , few are familiar with factoring. The most important thing to know about factoring is that it is designed to help companies that cannot afford to wait 30 to 60 days to get paid for their invoices. Companies that sell products to other companies or the government usually need to wait 30 to 60 days to get their invoices paid. While some companies have no problem extending 30 days terms, many do and can’t wait. Invoice factoring solves this problem by giving your company an advance for the invoice. This minimizes the amount of time you wait to get paid and provides funds to cover business expenses.

When you factor an invoice, your company actually sells the financial rights to the invoice to the factoring company. Because of this, the transaction is structured as a sale, with two payments from the factoring company. The first payment, usually referred to as the advance, is given to your company as soon as you sell the invoice. The advance is about 80 to 90% of the invoice. You get the remaining payment of 10% to 20% (less factoring fees) once your client actually pays the invoice. This second payment is usually referred to as the rebate.

One major difference between a business loan and a factoring line is that qualifying for factoring is a lot easier and quicker. Since factoring companies are usually buying the invoices they factor, their biggest concern is the credit worthiness of the company paying the invoices. Because of this, small businesses and distressed companies can usually have a good chance of getting a factoring line, provided they work with a strong roster of customers.

Costs for factoring will vary but are usually higher than the cost of a business loan. Costs are determined by the size of the line, the credit quality of the invoices, the industry and the stability of the client’s business.

Selling products and services to the US government can be a very profitable enterprise. The US government can be one of the best customers your business can get. They buy almost any product and service that exists. By law, they are structured to help small business owners succeed. And, unlike most commercial customers, they pay their invoices quickly. If you work with government projects you know that you need to treat this customer very well and be sure that you always deliver what you promised – on time and at the right cost.

So, what happens if you bid for a government contract, win it, and realize that you don’t have the capital to deliver? One alternative is to try and go to an institution to get business financing. Many institutions will provide a business loan (or similar financing) to government contractors. But as you know, qualifying for business loans can be very difficult, especially for startups. Institutions will review your business plan, along with your company’s financial statements, management team and track record. Because of this, many startup companies find that obtaining financing can be very challenging.

This problem is particularly challenging for product re-sellers. Most product re-sellers that work with the government need to pay their suppliers before they get paid by the government. Because of this, they can only compete for certain bids since their capital limits the size of the projects that they can pursue. Some resellers are able to negotiate better terms with their suppliers, basically enabling them to wait until the government pays them first.

There are two other alternatives that can help you grow. They are invoice factoring and purchase order financing. Both are alternative sources of financing and can be ideal for government suppliers.

Let’s looks at two examples to see how invoice factoring and purchase order financing can help your company grow. Let’s say that you have a government purchase order that you have completed and will get paid in 30 days. Let’s also say that your supplier needs to be paid in 10 days. The problem could easily be fixed if you could get an advance payment on your government invoice. That is exactly what accounts receivable factoring can do for you. It provides you with an advance on your invoice that enables you to pay your supplier on time. This enables you to maximize the use of your supplier’s payment terms to your advantage, helping you grow your company.

Now let’s look at a more complex problem. Let’s assume that you won a government contract that is substantial and you have a supplier that is demanding an advance payment before shipping the goods. This situation is very common for startups because few of them have any type of supplier credit. In this case, the solution is to use po financing. PO funding helps you pay your supplier so that the government order can be fulfilled. The transaction is then settled once the government receives the goods and pays for them.

Both receivables factoring and po funding are available to both new companies and established companies. Both are relatively easy to obtain and can be set up relatively quickly. This makes it an ideal solution for growing companies.

For many years, companies have relied on venture capital financing to grow and expand their businesses. Recently, most venture funds have been reduced in scope and size to deal with the current economic environment. Unfortunately, this has had a substantial effect in the broader economy by limiting entrepreneurship and innovation – key component of economic success.

Without venture capital, many business owners try to finance their companies by looking for a business loan from a lending institution. However, business loans are only given to companies that have strong collateral and can show profitable operations. Companies will also need to provide financial statements that will be rigorously reviewed to ensure that they meet institutional criteria. Because of this, this type of business financing is out of the reach of many business owners, especially at this time.

There is are alternative ways to finance your company. They can help you expand your company organically without generating any new debt. And more importantly, without having to give any equity in the business to someone else. Remember that when you use venture funding, you are selling a piece of your company to someone else. They will want a say on how things are done. Many times this is good, since venture capitalists usually have seasoned executives that can help you. However, it will take some of your independence away.

There are two alternatives that can help you, depending on your situation and line of business. One if factoring financing. Factoring bridges the 30 to 60 day gap between invoicing a commercial customer and actually receiving a payment. This advance payment enhances your cash flow, providing you with funds to pay current expenses and grow the business. The other alternative is to use purchase order financing. PO Financing only helps product resellers who have a large order and don’t have the funds to buy the product from their supplier. In both factoring and purchase order financing, the transaction is settled once the customer pays the invoice. And as opposed to other types of financing, the most important collateral if your customers credit rating. Thus, you can leverage your clients credit rating to fund operation expenses and growth. This makes factoring and purchase order financing an ideal solution for many businesses.

Capital rationing is an all too common problem in the current economic environment. Simply stated capital rationing occurs when you have more profitable projects than funds to implement them. Because of this, firms must ration (or limit) their expenditures and only do the most profitable ones – those that have the best internal rate of return or highest net present value. However, capital rationing may also prevent you from launching profitable projects, limiting the scope of your business.

At a much simpler level, it means that you are not making as many sales as you could. Let’s say that you have $50,000 and have two sales opportunities. Each sale opportunity requires a $50,000 investment to buy supplies and deliver the service. Sale opportunity #1 has a return of 15%. Sale opportunity #2 has a return of 20%. Logically, you choose sale #2. But what if sale #1 is still profitable for you? Wouldn’t it be great if you could also pursue that project? Well, you can’t because you lack funds. You have to ration your capital and can only pursue one opportunity. This can be painful for business owners that are forced to turn sales away.

One obvious solution to the capital rationing problem is to get business financing. That is easier said than done, especially in the current economic environment. Both business loans and lines of credit can be used to deal with capital rationing but can be difficult to obtain, especially for small and midsized companies. Qualifying for a business loan usually complicated and requires that a company be profitable for a number of years. Usually, most banks and institutions will also require substantial collateral before providing a business loan.

One alternative is to use factoring financing. Most companies have to wait 30 to 60 days before their invoices are paid by commercial clients. This has a negative effect on cash flow and many times affects a company’s ability to take on new projects. Invoice factoring provides an advance on your slow paying invoices, eliminating the payment wait. This accelerated payment enhances cash flow, providing funds that can be deployed to start new projects.

Whether factoring can help with your capital rationing problem is a complex question that varies based on each opportunity. However for many companies, especially those that are payroll intensive (e.g. staffing companies), factoring financing can provide to be the right solution to finance growth.

Getting any type of business financing has been incredibly challenging for business owners. One of the market segments that has been most affected by this are middle sized companies. Although bigger than their small company counterparts, they are usually not big enough to qualify for the business financing options that are available to larger companies. But without financing, most will never grow or flourish.

One alternative is to go the conventional route and try to get a business loan (or a line of credit) from a bank or a lending institution. However, credit requirements have been tighten substantially and few businesses are able to qualify for any type of financing. And those that do must be ready to provide and substantiate a long standing track record of profitability. Additionally, both companies and business owners can expect to put more collateral than previously required to secure the loan. Although conventional business financing may be out of reach for some companies for the time being, there are other options that can be used to finance their growth.

One alternative is to use invoice factoring. This type of financing is ideal for companies that have clients that pay in 30 to 60 days, but needs the funds sooner. Factoring helps businesses that need to convert invoices into cash to meet payroll or start new projects. One advantage of factoring over other alternatives is that factoring companies are most interested in the strength of your invoices, as that represents a company’s best collateral. So a midsize company that has no other collateral than invoices from strong clients can usually qualify. Companies that usually benefit from this type of financing are labor intensive businesses, such as staffing agencies, and consulting companies among others.

But factoring can’t always help every company. Consider this example. Suppose a product reseller, gets a large order from a retailer. The reseller needs funds to buy the product from their supplier (or manufacturer), in order to fulfill the purchase order. One good alternative is to use purchase order financing. Purchase order funding can provide the funds to pay the supplier, enabling them to fulfill the order. The transaction is settled once the retailer pays for the goods. Qualifying for purchase order funding is harder than qualifying for invoice factoring. To qualify, the transaction must have a minimum of 20% gross margins and the client must buy the finished goods from their supplier.

Although not widely used yet, these business financing alternatives have been gaining traction in the current economy. They enable mid size businesses to grow by allowing them to leverage on their most important assets – the purchase orders and invoices from their customer base.

Are you looking for a business loan? Many business owners who need business financing start their financing search by looking for a business loan or a business line of credit. Although business loans and lines of credit are well known products, they are very hard to get. And in reality, few business owners actually manage to get them.

In certain instances, invoice factoring may be a better and easier to obtain alternative. There are three conditions that can determine whether factoring is a better alternative than a business loan:

1. Are your clients’ slow payments hurting you? Do they take up to 60 days to pay?
2. Are you turning away bigger sales because you lack working capital?
3. With the right financing, does your business have significant growth potential?

If you answered yes to these questions, then chances are that factoring your invoices will be better for you than more traditional business financing products. Invoice factoring provides you with financing based on your invoices, eliminating slow payment cycles and providing you with money to pay rent, meet payroll and expand your business.

Since factoring is tied to your sales potential, it does not have the arbitrary use limits that business loans have. The more your business grows, the more financing you qualify for. Period. This makes it an ideal product for businesses that have significant growth potential.

Factoring (or receivable factoring as it is also known) is easy to use. Once you have invoiced your customers you send a copy of the invoice to the factoring company. The factoring company, in turn, advances you up to 90% of your invoice and waits to be paid by your client. Once your client pays the invoice, the transaction is settled.

In effect, by financing your invoices you eliminate the slow payment problem. You accelerate your cash flow, enabling you to pay your obligations, take new opportunities and grow your company.

In terms of cost, factoring is a very competitive product. Factoring fees range from 1.5% to 3% per month, making it an affordable product. If you own a business that is growing and you need financing, be sure to consider invoice factoring.

If you own a business and your clients take up to 60 days to pay your invoices, you may want to consider invoice factoring. Invoice factoring eliminates the payment wait and gets your invoices paid in a couple of days. This gives you the necessary financing to pay ongoing expenses such as suppliers, salaries and rent.

But invoice factoring is different from most traditional financing. For starters, it is not a business loan, but rather, a sale of invoices. Although it may not be clear at first sight, you can finance your business by selling your invoices.

Basically, when you factor your invoices, you sell them to a factoring company, who pays you for them. When the factor buys your invoices, it’s common that they’ll pay you in two installments. The first installment, called the advance, is provided as soon as you sell the invoice. The second installment, called the rebate, is provided once your client pays for the goods/services.

Lets look at a factoring transaction to see how it works:

1. You deliver goods and services to the customer.
2. You invoice the client
3. You sell the invoice to the factoring company
4. Factoring company advances (installment #1) between 70% and 95% of the invoice
5. You get immediate money for your business
6. The customer pays the factoring company
7. The factoring company rebates you (installment #2) the remaining money, less a small fee

As you can see, the sale of your invoices provides you with accelerated funds that can be used to run and grow the business. Although factoring is a great tool, it only works to solve one very specific problem. That is, that you can’t afford to wait to get paid by your clients. However, it solves this problem better that most other financial tools. Furthermore, as opposed to bank financing, invoice factoring is easy to obtain and can usually be set up in days.

Do you have clients that take 30, 50 or 60 days to pay their invoices? Although having slow paying clients is expected in today’s business environment, they make managing cash flow a very difficult task. Paying suppliers, salaries and rent becomes a challenge.

However, there is a way to solve this problem. The solution involves factoring your invoices.

Factoring is a financing tool that allows you to get your invoices paid in as little as 2 days. It provides your company with the necessary capital to operate the business, pay suppliers and grow. However, factoring is not a business loan. Rather, factoring involves selling your invoices at a discount for immediate cash. The factoring company waits to get paid, while you get immediate use of the funds.

Factoring can easily be integrated to any business and works as follows:

1. You deliver goods or services and invoice for them
2. You sell the invoice to the factor. They give you the first installment of 70% to 90% of your invoice. This is called the advance.
3. You get immediate funds to run your business
4. Once the customer pays the factoring company, you get the second installment (of 10% to 30%) and are charged a small fee for the transaction. This is called the rebate

Although factoring costs vary and are based on transaction size and timing, the average cost of a transaction is usually between 1.5% to 3% of the invoice per month.

One major advantage of factoring is that it is easier to obtain than a business loan. Furthermore, the factoring line can be set up in about a week, and the biggest requirement for approval is that do you business with credit worthy clients.

Are you selling goods or services to commercial customers or to the government? If so, you are probably used to the idea of having to wait up to 60 days to get your invoices paid. However, waiting to get paid can be challenging, especially if you have business expenses that can’t wait.
That is where a factoring company can help you.

Factoring companies can provide you with financing, based on your slow paying invoices. They eliminate the 60 day payment waiting period and provide you with the necessary liquidity to meet payroll, pay rent and meet business obligations. Here is how factoring works in a nutshell:

1. You invoice your customers and send a copy of the invoice to the factoring company
2. The factoring company advances you up to 90% of your invoices
3. You get immediate use of the funds. The factoring company waits to be paid.
4. Once the factoring company is paid by the customer, the transaction is settled

Although many business owners will go to a factoring company to get financing, factoring companies also provide other important services. Most notably, factoring companies can act as your business credit department. They can review existing clients and new prospects and advise you of their payment habits. And since they manage your accounts receivable, factors can also provide you with important financial reports and financial analysis.

More importantly, a factoring company can help you grow your business. By turning your slow paying invoices into cash, they give you the financing and the flexibility to take on new opportunities. And, factoring financing lines don’t have arbitrary limits like business loans. They grow in relation to your sales. The more you sell, the more financing you get.

Because of these benefits, factoring companies can be great business partners and help finance your business growth.

One of the challenges of looking for conventional business financing is that it can take a very long time to find out if you will qualify for it or not. Although there are no hard and fast rules, most companies report that it takes a couple of months to go through the process. It’s understandable that institutions take that long to reach a decision, they have to do a lot of due diligence to make sure they make a solid investment. At the very same time, the long application process also puts your company in the very tough position of waiting a long time to know if you’ll get financing – or not.

If your company needs financing quickly – or can’t qualify for a business loan – you should consider whether invoice factoring is the right solution for you. Factoring financing has been gaining traction, especially among companies that need flexible financing.

Factoring invoices provides a simple very proposition. It allows you to get a funding advance against your accounts receivable, providing you with working capital to pay employees and suppliers. So, instead of waiting 45 days to get paid by a client, the factoring company can give you a working capital advance. This provides the financial liquidity to meet your company’s current obligations and allows you to take advantage of new opportunities.

Factoring can be incorporated into most companies and works as follows. First, you deliver your product or service. Then you invoice your client. Now, instead of waiting to get paid, you send the invoice to the factoring company. In turn, the factoring company advances about 80% of the gross value of the invoice to you. Once your client pays the invoice, the factoring company advances the remaining 20% of the invoice to your company, less the financing fee.

Factoring costs can be higher than the costs of conventional products (e.g. business loans), which should be taken into consideration. Monthly fees can range from 1.5% to 3.5%, depending on the company’s industry, financing volume and other parameters. As a rule of thumb, factoring works best if a company has margins of at least 15% and customers that pay regularly. However, each business owner should evaluate whether factoring will work for the company.

There are some substantial advantages to using accounts receivable factoring. First, accounts receivable financing is easy to obtain. Second, it’s a flexible financing solution where financing increases are tied to your sales, making it an ideal tool for startups. And lastly, it can be setup quickly. Depending on your transaction, many times it can be financed in as little as 2 weeks.

Do you sell products or services to commercial or government customers? If you do, then you must be very familiar with having to wait 30, 40 or even 60 days to get paid by your clients.

Most large businesses can afford to wait. Unfortunately, few small business owners can afford to wait – and worse – most small business owners do not take into account that they will have to wait to get paid when they first start their businesses.

But what if you can’t afford to wait 60 days to get paid? The best solution is to factor your invoices.

Factoring is a financial tool (similar to a line of credit) that eliminates waiting to get paid by your clients. Factoring financing provides you with money for your invoices, usually 24 hours after you submit them. It provides you with the necessary cash to pay rent, expenses and take on new opportunities.

Invoice factoring is an ideal tool for cash intensive businesses such as trucking, staffing, business services, medical offices and IT. It works as follows:

1. You deliver a product or a service and generate an invoice
2. You submit the invoice to your client and send a copy to the factoring company
3. The factoring company advances you up to 85% of your invoice
4. The remaining 15% is held as a reserve to cover charge backs and credits
5. Once your client pays the factor, the transaction is settled and the reserve is rebated (less a small fee)

And how much does factoring cost? It varies on your business volume, how long your clients take to pay and their credit worthiness. Most factors will charge a fee of anywhere between 1% and 2.3% for every 10 days that an invoice is outstanding. However, fees vary and can usually be customized to fit your needs.

The biggest difference between invoice factoring financing and a bank loan is that factoring is easy to obtain. Since the factor is financing your invoices, their biggest concern is that you do business with strong credit worthy businesses. This means that factoring is available to small and new businesses, provided that you have good clients. And as opposed to a bank, a factoring company will not ask you for endless financial reports and three years worth of audited financials.

Is cash a little bit tight? Have you ever risked missing payroll? Have you ever had to pass up an opportunity because you did not have enough money? If so, you are not alone. Every business owner goes through those same challenges every day. Some come out on top. Others perish.

What is the biggest difference between those that succeed and those that perish? Cash flow. And plenty of it.

If you work with commercial or government clients, then you are already used to waiting up to 60 days to get paid by your clients. That is ok if your business has lots of resources and a stash of cash in the bank. But what if you don’t?

One of the most frustrating things that can happen to a business owner is realizing that his company is invoice rich and cash poor. Meaning, you have tons of money owed to you by clients (and payable in 60 days) but little cash to show for it. This does nothing for you, if you need to meet payroll in 3 days or need money to buy supplies for a new project. Fortunately, there is an easy way to turn those invoices into cash, without using any collections or heavy-handed tactics.

The solution involves factoring your invoices. Never heard of invoice factoring? You are not alone. Factoring is one of the most used and least talked about business financing tools. It allows you to convert your invoices into immediate cash. It helps you turn your invoice rich business into a cash rich business.

Qualifying for factoring is simple and only takes a few days. As opposed to business loans, you don’t need a long business history or reams of financial statements to qualify. All you need are invoices for credit worthy commercial clients or government clients.

And how does factoring work? Well, it simpler than you think. As soon as you have completed a job, you submit an invoice to your client and send a copy to the factoring company. The factoring company will advance you a substantial portion of your invoice, usually within a day. Once your client pays the invoice, the transaction is settled.

As you can see, factoring provides you with immediate cash as soon as you invoice. This helps you meet payroll, pay suppliers and take on new jobs. With factoring, you can streamline your billing cycle and grow your company, without ever needing a business loan.

Can’t afford to wait 30 to 60 days to get paid by your clients? If you are like most business owners, waiting to be paid can be very challenging. In some cases it can mean lost opportunities. It can mean that you don’t bid for big sales because you know you won’t be able to play the waiting game. At its worst, it can spell disaster. It can mean that you need to delay payroll. It may mean that you don’t pay rent or taxes. It may force you to shut down your business.

If you are like most business owners, your first reaction will be to call your banker. Unfortunately, banks will not lend money to businesses that are new, have no hard assets or don’t have three years worth of profitable financial statements. At this point, most business owners give up, thinking that they don’t have any other options. However, they do.

If your company sells products or services to large credit worthy companies, you could qualify for invoice factoring financing. Invoice factoring reduces the time it takes for you to get your money to one day. How quickly could you grow your business if your invoices were paid in 24 hours?

As opposed to bank loans, factoring companies do not require hard collateral. The only requirement is that you have invoices form credit worthy clients. Factoring companies work differently than banks. A factoring company will provide you with financing based specifically on your invoices. This means that if your invoicing grows, your financing also grows.

Factoring is very simple:

1. You generate invoices for your products or services
2. You submit the invoices to your clients and to the factoring company
3. The factoring company advances you up to 85% of the gross value of your invoices (the remaining is kept as a reserve to offset disputes)
4. Once the invoice is paid by your client, the factoring company releases the 15% reserve and charges their fee

Factoring financing is easy to qualify for and can virtually eliminate the 30 to 60 days it takes for your customers to pay. It provides you with the necessary working capital to grow your company and take new opportunities.

Managing a company’s cash flow can be one of the toughest jobs in a business, especially if you sell products and services to other businesses or government agencies. Most commercial and government clients pay their invoices in about 45 days. In the meantime you still need to pay regular business expenses and salaries. Although established companies may be able to absorb the wait, most new and growing companies can’t. They just don’t have the financial resources to do so.

One approach is to try and get a quicker payment from your clients. This seldom works. Most companies and government purchasing agents will insist on paying invoices in the usual schedule. And, you run the risk of losing the contract as your client may start questioning your company’s financial ability to meet its obligations. Another strategy is to look for a business loan from your bank. However, banks only provide business loans to companies that have solid financials and a substantial track record of profitable operations. Unfortunately, the kind of business financing that banks offer is outside the reach of most business owners.

There is an alternative. Let’s say that you had an agreement where your clients would pay you 80% of your invoice upon delivery and the remaining 20% after 45 days. Most companies would not have any cash flow problems if they could secure those payment terms. They would have enough money to cover their businesses expenses and tackle new projects. Unfortunately, most clients won’t offer those terms to you. However, you can get a similar arrangement from a factoring company by factoring your invoices. This enables you to give your clients 45 days to pay without problems.
Factoring financing provides a simple but valuable proposition. You get about 80% of your invoice immediately upon delivery of your services. The remaining 20%, less a small fee, is given to you as soon as your client pays for the invoice. This arrangement provides you with predictable cash flow, enabling you to meet ongoing expenses and putting you in the path to growth. Furthermore, invoice factoring is flexible and can grow with your company. Financing is tied to your sales, which means that it expands as your company grows.

Getting a factoring financing facility is a lot easier and quicker than getting a business loan. It usually takes about a week to set it up. The biggest requirement to qualify is to do business with companies (or government agencies) that pay their invoices on time. And, factoring can be quite affordable too. The cost of the service is determined by the size of your financing facility and the credit quality of your clients. Monthly costs can range from 1.5% to 3.5% depending on these criteria.

Most companies that have decent profit margins and are challenged by slow paying customers can benefit from factoring invoices. The benefits, such as having a predictable cash flow and being able to meet expenses on time, sure outweigh its cost.

Looking for small business financing has always been a challenge for company owners. Even in good times, qualifying for the financing you need has been difficult. As a rule, most banks require that your company has a track record of success and they need a few years worth of financial history. Most importantly, institutions want to make sure you have collateral – things like equipment and real estate – to back your business loan. Because of this, many industries with no hard assets such as staffing and consulting have a hard time obtaining business loans.

There are others form of financing that can help business owners – at least in some specific situations. One form of financing that has been gaining traction in the past few years is invoice financing. It can be an ideal solution for companies that are waiting 30 to 60 days to get their invoices paid, but need the money sooner.

For example, let’s say that a staffing agency invoices $200,000 to a client that will be pay in 45 days. In the meantime, the agency needs to pay employee salaries every two weeks. If the company does not have enough capital to pay employees while waiting to get paid, then it will run into problems. In this case, a solution is to get an advance on the invoice by factoring it.

In a factoring transaction, the factoring company advances funds against an invoice. The advance is usually 70% to 90% of the invoices and varies by industry. The advance provides working capital that enables the owners to meet payroll and other business expenses. Once your client pays the invoice in full, you get the remaining funds, less the factoring fee. The fee varies based on a number of parameters but can range from 1.5% to 4.0% for an invoice payable in 30 days.

Qualifying for accounts receivable factoring is relatively easy, when compared to other business financing products. To qualify, the company must be in good standing, free of any liens and have a roster of good paying customers. Factoring companies consider your invoices to be your biggest asset and are very happy to use those as collateral. That makes their services accessible to companies of all sizes, including startups. More importantly, it provides funds to companies whose biggest assets are a good reputation and a list of solid clients.

Do you have clients that take 30, 60 or even 90 days to pay their invoices? If you do, you are familiar with the strain that slow payments place on your company. Unless you have a reliable cushion of funds in the bank, paying suppliers and employees on time will be tough. And growing your business may be out of the question, at least temporarily, because growth requires cash.

Companies that have this predicament have a couple of options. They can get a bank loan or a line of credit. But those are tough to qualify for and very hard to obtain. A better alternative is to use invoice financing, better known as invoice factoring. As a tool, factoring invoices enables you to get paid in 2 days, rather than in 30, enabling you to operate and grow your business.

Factoring invoices has many advantages over other products. First, factoring is relatively easy to obtain. Second, factoring financing lines are directly tied to your sales and have no arbitrary limits. That means that the more you sell, the more financing you can obtain.

When is it appropriate to use receivables factoring?

If any of the following two statements are true, then accounts receivable factoring should benefit your company.

1. You cannot afford to wait 30 to 60 days to get paid by customers. If your company’s biggest problem is that you need your money sooner than the usual 30 to 60 days it takes for your clients to pay, then factoring is the ideal product for you. Factoring can eliminate the wait and make your cash flow predictable.

2. You need money to pay suppliers or employees. Companies that need money to pay for ongoing expenses, such as employees or suppliers, can really benefit from invoice financing. Invoice factoring will streamline cash flow and help you meet ongoing obligations. However, companies that need the funds to purchase equipment or to buy real estate will usually not benefit much from factoring. There are other products in the market that will be better.

Factoring invoices is a great tool that can help make payments predictable. This allows you to plan for growth and enables you to capitalize on new and exciting growth opportunities.

Managing their cash flow can be one of the most important duties of a business owner or manager. And it can be one of the most challenging. Most companies have clients that pay invoices in 30 to 60 days. Many times, this forces business owners to juggle payments to suppliers while they themselves are waiting to be paid by clients. The end result is that you miss taking certain opportunities because you lack the working capital to pursue them.

If your clients are not willing to pay you sooner, your best alternative is to use a factoring advance. Invoice factoring provides you with a substantial advance, usually 80% of your invoices, quickly after invoicing. This provides you with immediate working capital to pay suppliers and employees. Also as important, it provides you with working capital to follow new opportunities to grow your company.

Accounts receivable factoring is a type of business financing that is offered by factoring companies. It is not a business loan, but rather an advance on an invoice. This difference makes it much easier to qualify for than conventional small business loans. The biggest requirement to qualify is that you must do business with clients who are solid payers. An invoice factoring financing line can also be set up quickly. Getting started takes about a week, and subsequent financings can be done within one business day.

Receivable factoring transactions are set up differently than other financing transactions. For starters, the factoring company is buying the financial rights to your invoice, for a fee. They buy your invoice in two installments. The first installment, called the advance, is paid immediately at invoicing and is about 80% of the gross value of your invoice. The second installment, called the rebate, is paid once your client pays the invoice in full. This rebate is the remaining 20%, less a small financing fee.

Factoring fees vary and are based on the size of your financial line, the credit quality of your clients and the timeliness of their payments. They generally range from 1.5% for large accounts to 4% for modest sized lines.

Although factoring invoices does not fit every business, it is a great solution for companies that have to wait up to 60 days to get paid for their invoices – but can’t wait.

Factoring financing is one of those business financing tools that is not well known by the general public but widely used in the business community. It is widely used, because it’s easy to implement, can be set up in a few days and can provide the working capital that a business owner need to grow their business.

When a business owner needs working capital, the first thing they do is to visit their banker. However, they soon learn that getting funding from a bank is very hard. As an owner, the bank will demand that they have great personal credit. The bank will also want to see three years worth of audited financial statements – showing a profit.

If your business is new, it’s close to impossible to qualify for bank financing. However, factoring may be an alternative that is better for your business, and easier to get.

If you have clients that take 30, 45 or even 60 days to pay their invoices, and if this is hurting your business, invoice factoring can help. Factoring can provide you with a substantial advance on your invoices, providing the working capital you need to pay suppliers and employees. And, as opposed to conventional business loans, receivables factoring is easy to obtain.

Invoice factoring is also easy to integrate to all businesses. This is how a transaction looks:

1. You deliver the goods or services
2. You invoice your client
3. The factoring company advances you up to 85% of your invoice as a 1st installment. You can use these funds to pay suppliers and employees
4. Once the invoice is paid for, you receive the remaining 15% less the factoring fees.

Most factoring fees range between 1.5% to 3.5% based on certain criteria, but different factoring companies assess their fees differently. The biggest criteria to qualify for factoring is that you should do business with customers that pay their invoices reliably, such as government agencies or large corporations.

One of the biggest advantages of factoring financing is that it is tied to your sales. So as your sales grow, your financing also grows. This makes it an ideal tool for companies that are expanding.

Are you selling products or services to the federal government? Every year, city, county, state and the federal government buy billions of dollars in goods and services from business of all types.

Although doing business with the government is great and financially rewarding, it can also be hard on your cash flow. Why? Government agencies take, on average, about 40 days to pay their invoices. In the meantime, you have to cover all your recurring expenses such as payroll, rent and supplier payments.

This is not a problem if you have 60 days worth of operating capital in your bank account. But what if you don’t? In that case, many business owners will try to get a business loan. Although that may help, business loans are tough to get and take a long time to set up. Also, business loans have set limits.

What business owners need, is a product that provides financing solely based on the business opportunity – on sales possibilities. This product exists and is called invoice factoring. There are many factoring companies that specialize in factoring government contractors and vendors.

Invoice factoring accelerates your government payments, and enables you to get paid in days rather than months. It’s a form of financing where the factoring company advances you money against your government receivables. You get to use the funds immediately, while waiting to get paid. Once the government pays, the transaction is settled.

If you are reselling products to the government, you should also consider purchase order financing. In this case, the factoring company provides you with financing to pay your suppliers, enabling you to make the sale. Purchase order financing works well with invoice factoring and can also help you grow your company – exponentially.

So, if you own a business that sells to the government, be sure to look into factoring and purchase order financing.

Many business owners think that the most effective way to finance their companies is to secure venture (or Angel) financing. Venture capital has a number of advantages, however, there are two major disadvantages that should be considered. The first one is that venture capital is very hard to obtain. The second disadvantage, which is the focus of this article, is that venture capital requires that you give up an equity stake (ownership) and some control to the venture company. Many times, the ownership stakes that VC’s require can be substantial, leaving the founders in a minority ownership/control position.

There is an alternative to venture capital that is often overlooked. It’s a form of business financing that provides you with the capital you need to cover operating expenses and grow your company. It’s easier to obtain than a business loan or conventional venture capital funding. The catch is that it only works for certain types of companies.

Does your company sell its products to other companies or to government entities? If you do, then you are familiar with the fact that most companies pay their invoices in 30 to 60 days. However, while waiting for payment, you still need to pay suppliers and employees. Few startups or growing companies have the necessary reserves to cover expenses while they wait to get paid. This restricts their ability to grow and capitalize opportunities. This is where factoring your accounts receivable can help you dramatically.

Invoice factoring, as it is commonly referred to, provides you with an immediate advance on your invoices. Factoring eliminates the need to wait for payment and provides you with the liquidity to pay suppliers and employees. It gives you a solid financial footing that enables you to take on new business opportunities.

One of the biggest advantages of factoring receivables is that it’s fairly easy to obtain. To qualify for it, your company must do business with credit worthy clients, such as large companies or government agencies. This is the most important requirement because your invoices to those clients are used as collateral.

A substantial benefit of receivable factoring is that you will never have to give the factoring company any equity or ownership in your business. Once you meet your business objectives – you can finish your relationship with the factoring company with no further obligation.

The cost of factoring varies based on a number of parameters, such as the amount of financing you need, the credit quality of your clients and the stability of your company. As a rule, monthly rates go from 1.5% to 3% based on these criteria.

If your company sells products and wait up to 90 days to get paid, you should consider factoring as an alternative to finance your company.

Waiting 30, 40 or even 60 days to get invoices paid can be a major challenge for any business owner. Although the work has been completed and delivered, the payment will come in weeks. In the meantime, the business has to pay employees, rent and regular expenses. If your business has a substantial cash reserve, this should not be a major problem.

But, what if your business doesn’t have substantial cash reserve? Many owners will try to get a business loan. But that won’t help. Why? Because getting a business loan is almost impossible unless the business owner has good credit and can prove three years worth of profitable business operations. Another option that is quickly gaining popularity involves factoring invoices.

Factoring financing allows you to eliminate the payment wait and gets your invoices paid in as little as two days. With invoice factoring you eliminate the uncertainty of when you’ll be paid, which allows you to better manage and grow your business. Receivables factoring is easy to obtain and can be set up in days. Furthermore, if used properly accounts receivable factoring can work better that a business loan.

Here is how the factoring invoices works:
1. You deliver goods/services to your client
2. You sell the invoice to the factoring company
3. The factoring company pays you the 1st installment which can be as much as 90% of the invoice
4. Once your customer pays the invoice, the factoring company rebates you the 2nd installment, less the fees.

Since factoring companies buy your invoices, the biggest requirement to qualify for this type of financing is that you do business with customers that pay reliably. The cost of factoring will in large be determined by the volume of financing and the paying quality of customers. Generally speaking, the cost will range between 1.5% and 3.5% per month.

One big advantage of factoring over others types of financing is that there are no arbitrary limits or ceilings placed on your financing line. Whereas loans and lines of credit always have a “maximum”, factoring has no maximums. Your factoring line will grow with your sales, provided you sell products to good paying clients.

So, if you are looking for a reliable way to finance your growing business, be sure to consider using a factoring service.

Securing funding for a new venture has always been a challenge for business owners. Ensuring that the company has the proper level of financing is one of the most critical tasks. However, finding financing for a new venture can be very hard. On one side, you can try and secure venture or angel funding. This type of funding will require that you give up a portion of your equity/ownership in the business. It means you will end up with additional partners – or managers – in your company.

Another route consists of trying to get conventional business financing, such as a business loan. However, few startups can get business loans because most financial institutions require that the company have a track record of successful operations and substantial assets. Since most startups don’t have long track records and have few assets, few can meet these requirements.

Cash flow can even be more problematic for companies that sell to other businesses or to government agencies. This is because they usually have to invoice when they deliver the goods, and then wait 30 to 60 days to get paid. Growing a business while waiting a month or two to get paid can be hard to do. Many times growth is delayed and opportunities are passed. This is an alternative however.

What would happen if you could get your invoices paid in 1 or 2 business days and essentially ran a cash business? Would you still need financing? Would you still turn away opportunities? This can be accomplished by using a neat financial trick – factoring your invoices.

Invoice factoring enables you to get a substantial portion of your invoices paid immediately, providing you with the funds you need to pay suppliers and employees. More important, you get the funds you need to keep up with your growing orders. If you have a business that is firing on all cylinders, factoring accounts receivables can really help fuel your company’s growth.

Factoring offers a simple proposition. A finance company, called a factoring company, advances you up to 80% of the net value of your invoices. You get the immediate funds while the factoring company waits to get paid. Once they get paid, you get the remaining 20%, less the factoring fee.

One of the more important features of factoring receivables is that factoring companies biggest criteria (though not the only one) for providing financing is the quality of your clients. This means that if you do business with large credit worthy companies you stand a good chance of qualifying for financing. Furthermore, Invoice factoring can be setup quickly. Usually it takes a week or two to set up an account, and after that, funding can be done daily.

Although factoring financing has been around for a long time, it has been gaining traction and notoriety recently as a solution for growing companies. It offers great flexibility, as your financing is determined by your sales and the quality of your clients. This makes it a great solution for companies whose biggest asset is the clients that they do business with.

Peter owns a successful business that is growing quickly. Like many businesses, Peter’s company has good commercial and government clients that buy regularly from him. And since Peter is really good at his business, his clients have been purchasing more and more products from him. His business appears solid.

But some cracks are starting to appear in the foundation. He’s been close to missing payroll twice. He’s delaying supplier payments. Even worse, he chose not to bid for a major government contract because he couldn’t afford to. That’s true – he couldn’t afford to bid for new business. He was afraid of having to add more employees and buy more materials.

How can that be?

Like most business owners, Peter extends terms to his clients. They usually pay him in 30 to 45 days. But, since Peter runs a small business, his suppliers demand that he pay them in 10 days. Plus employees need to be paid every two weeks.

In summary. Peter has clients that want to pay in 45 days and suppliers/employees that want to be paid in 10. Since the company does not have a lot of money in the bank, the math doesn’t work.

Is there a solution? Yes, Peter should consider factoring his invoices to fix his cash flow. Factoring will provide him with the necessary cash to pay suppliers and employees, while eliminating the 30 to 45 day wait to get paid.

Invoice factoring works as follows:

1. You deliver the product or service and invoice your client
2. You send a copy of the invoice to the factoring company for financing
3. The factoring company advances you up to 90% of the invoice. You get immediate funds.
4. Once your client pays the invoice, the transaction is settled

With factoring, Peter will be able to meet his current obligations. His company will also have enough cash on hand (or liquidity) to bid on new job proposals, allowing him to grow the business and take it to the next level.

Waiting up to 60 days to get your invoices paid can really be a major source of stress for business owners. This can be especially painful if you have to pay rent, suppliers and meet payroll. This is even more painful when most of your money is tied up in slow paying invoices. Having money tied up in slow paying invoices can also prevent you from capitalizing on new opportunities. Why? Because few business owners can deliver large orders to new clients and then underwrite the transaction for up to 60 days.

If you cannot afford to wait to get paid by your clients there is a solution that can provide you with the necessary financing. It’s called factoring financing. With factoring you can accelerate the payment for your invoices and get funding to pay rent, pay your suppliers, meet payroll and take on new projects.

As opposed to bank financing, invoice factoring is easy to qualify for. The main requirement for invoice financing is that you have invoices from mid size and large commercial customers. Most factoring companies are comfortable working with new companies – even if they have no hard collateral – provided that they have good invoices and a solid business plan.

Another advantage of factoring is that your financing is not fixed on any specific amount, like a loan or line of credit. You can usually factor as many invoices as you can deliver on. As a tool, factoring allows you to tap into the power of your greatest asset – your roster of credit worthy customers. It allows you to grow and capitalize on new opportunities, while circumventing the restrictions and challenges of obtaining regular bank financing.

Do you have clients that take up to 60 days to pay their invoices? If you do, you know how tough that can be on new and growing companies. Waiting to get paid for your slow paying invoices can wreck complete havoc on your company’s finances.

Most business owners try to address this issue by going to a bank to try and get a business loan. However, banks are notoriously conservative and getting a business loan can be very difficult. This is where a factoring company can help you.

Factoring companies eliminate the 60 day wait and get your invoices paid in as little as 2 days. How? By buying your invoices and paying you immediately for them. You get the financing you need, while the factoring company waits to get paid by your client. You get money to meet immediate expenses such as payroll, rent and supplier payments.

Factoring transactions a fairly simple and take 4 steps:

1. You invoice your client and sell the invoice to the factoring company
2. The factoring company advances you the first payment of 70 to 90% of the invoice
3. The factoring company waits to get paid by the client
4. Once paid, the factoring company provides you with the second payment, called the rebate (less a small fee)

One of the big advantages of working with a factoring company is that they can usually extend you more financing than a bank can. Whereas a bank will set a credit limit based on your company’s financial situation, the factoring company will set a limit based on your sales potential. This allows you to grow your company to its true potential.

Most sales to commercial clients usually carry 30 to 60 day payment terms. This means that as a supplier, you must deliver your products or services now. However, your client has between 30 to 60 days to pay you.

This creates a significant challenge for owners of small and midsize businesses. The problem is simple. Your clients want to pay you in 30 to 60 days, but you must pay rent, payroll and your suppliers now. As you can see, the math does not work. Unless you have a substantial bank account, this leads to an almost impossible situation.

If you are in this situation, it is also very likely that the bank will not be able to help you. As you well know, banks only lend to businesses that have three years of profitable operations and significant hard collateral. If you do not qualify for bank financing, your best bet may be to consider factoring.

Factoring is a business financing tool that helps business owners who cannot afford to wait 30 to 60 days to get paid by their commercial customers. Factoring provides you with the necessary funds to meet payroll, make rent and pay your suppliers on time.

As opposed to bank financing, factoring is easy to qualify for. The main requirements are that you have a profitable business with a strong roster of commercial clients. For the factoring company, your best collateral is the invoices from your strong customers.

Factoring is also easy to use. It enables you receive a substantial portion of your billings within a day of invoicing. It reduces the time you wait to get paid from 60 days to 2 days. The transaction is usually structured as a two installment sale of an invoice. The first installment, called the advance, is paid to you immediately. The advance can be anywhere between 70% and 90% of the gross value of the invoice. The remaining portion (10% – 30%) is held as a reserve to cover disputes and charge backs. The reserve is rebated as soon as the invoice is paid in full. The factoring company will charge a small fee for this service.

Factoring financing is an ideal tool for companies that are growing and that cannot afford to wait to get paid by the clients. It helps you to stabilize your financial situation and positions you for growth.