Finding financing has always been relatively easy for established companies, provided that they have a track record of success. Most companies that have sales in the range of a million dollars per month can find financing from either their local bank or from other institutions. It’s a different story if your company is smaller though.

Everyone agrees that having the right capital structure with the right sources of financing is critical for the success of a company. The problem is that few institutions are willing to make a business loan or offer any type of business financing to small companies. Large institutions don’t like to lend to small businesses because they find them risky. In part they are right, small businesses have a high failure rate. On the other hand, a small business has a very low chance of succeeding unless they find appropriate funding.

Most business owners will try conventional sources of financing at first. And some will actually succeed in getting business loans or similar financing from their local institutions. But like all small business owners, they will need to show an established track record of success and will need to have substantial assets to back up the financing request. However, if conventional sources fail, few business owners know where else to go for financing.

One possible alternative is to use invoice factoring. One common challenge for small companies is working with commercial and government clients that pay in 30 to 60 days. This practice of offering terms usually ends up tying the company’s capital, restricting their ability to pay vendors or employees. This also restricts their ability to pursue new clients, since they lack the capital to service those accounts. Factoring invoices eliminates this problem by advancing you funds against your invoices. Instead of waiting for your client to pay – you can have the factoring company advance you the funds (less a discount). These funds can be used to pay existing obligations or be invested in new projects or clients.

A major advantage of a using accounts receivable factoring is that most company owners can obtain it relatively easily. To qualify, companies need to have a solid roster of commercial or government customers. Companies also need to be free of major issues – or if they have problems – they need to have a turnaround plan in place.

The reason accounts receivable factoring is easier to obtain than other sources of financing is that they look at your invoices from customers as their main collateral. This allows companies that have a solid base of clients to use that as leverage to fund operations and growth.

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.

The number of troubled businesses has increased dramatically as a result of the current economic environment. Usually, the problems start when clients start delaying payments. This has a negative impact on cash flow, and if your company does not have a working capital reserve, it can create major problems. The first reaction for most owners tends to be to delay vendor payments as well. That seldom works as a long term solution unfortunately. Before long, like falling dominos, other payments start getting delay and the company gets into deeper trouble.

Most company owners look for business financing – hoping to implement a stop gap solution to the working capital problem. Unfortunately, getting a business loan is very hard for companies that are not in pristine financial condition. The catch 22 is that if the company where in pristine financial condition, it would probably not need a business loan. Most of time times, this situation can be fixed with the right financing. Otherwise, the company risks going out of business.

There is a solution that can help companies who face slow paying clients and who are not in the best financial shape. It solves this particular problem at its source – the slow client payments. The solution is called invoice factoring.

Factoring provides you with a funding advance for your slow paying invoices. It provides you the capital you need to pay suppliers, vendors and employees – on time. The fact is that while your clients are paying invoices more slowly, most of them are still good solid clients. Factoring companies can provide you an advance on your invoices because they consider them to be your best collateral – something most institutional lenders don’t always do. Because of this, invoice factoring can be a good solution for a troubled company that still has a solid roster of clients.

Another advantage of factoring is that is a dynamic form of financing that grows with your business. Since financing is tied to your invoices, it can be used to grow your business and restore its financial health.

There is something interesting about recessions. Although nobody likes them, many times they provide growth opportunities to businesses. Through careful planning and solid execution, many business owners are able to increase their market share and grow their companies. The catch is that more often than not – they need business financing.

Getting a business loan, or any type of business financing, has been a challenge in the current economic client. Institutions are not lending, either because they lack the funds themselves or because they don’t trust their client’s collateral. Institutions themselves must also follow tough guidelines regarding what they can finance or not. Does that mean that you are out of options? Not really, it just means that you need to know where to look.

One business financing option that has been overlooked in the past few years is invoice factoring. Invoice factoring is a bit different than other forms of financing. It helps companies that have commercial or government clients and that have to wait 30 to 60 days to get paid for their invoices. While many companies can afford to wait to get paid, few realize the true cost of waiting, also called the opportunity cost.

Factoring invoices provides working capital, using the soon-to-be-paid invoices as collateral. Invoices from large or medium sized companies tend to be good collateral that can be financed, and that is where factoring comes in.

What makes factoring financing appealing to companies is that is relatively easy to obtain. The most important requirement is that you do business with solid customers. This product is usually offered by private finance companies called factoring companies, though some banks offer it as well.

Factoring is a tool that can be used to grow your business when other types of financing are hard to obtain or out of reach. It has the added advantage that it grows with your sales, providing your company with a dynamic form of financing.

As a result of the current credit environment, finding the necessary business financing to grow their companies has become the full time job of many CEO’s, CFO’s and company owners. For example, venture capital has become increasingly difficult to get – and understandably so. Some venture capitalists are being extremely cautious, while others just have their own financial problems and are not in a position to finance other companies. Other institutions are not too helpful either. For example, getting a business loan has become increasingly more difficult, and in some instances, impossible to obtain. Many institutions require audited financial statements, proof of hard assets, excellent credit among other things before issuing a business loan. Unfortunately, this puts business loans out of the reach of many businesses – especially those that don’t have collateral in the traditional sense of the word. There is a possible solution though.

Some businesses may be able to use accounts receivable factoring to fund their growth. One of the biggest challenges for companies that have commercial sales is having to wait 30 to 60 days to get paid. This also applies to government contractors and suppliers who must also wait to get paid. Many companies would not need a business loan or venture capital to finance their growth, if their clients paid quickly. You can achieve this using accounts receivable factoring. This form of financing has a number of advantages over other forms of financing. By factoring receivables you can get working capital for your company without while minimizing the problems – and hassles – of waiting 30 to 60 days to get paid.

Getting a receivables factoring financing line is fairly simple, since the main qualification criteria is that you do business with credit worthy clients. But more importantly, accounts receivable factoring is dynamic, and grows (almost automatically) with your sales. This makes it an ideal solution for companies that are growing and have solid prospect – but are having challenges finding a financial partner to back their business.

Funding a business in the current environment has been a challenge for company owners. The business financing environment has not been friendly business owners, in part because many funding companies had problems of their own. Because of this, they have tightened their commitment requirements.

Some companies have tried a different approach and opted to look for business loans. Unfortunately, trying to get a business loan in the current environment is also very difficult. Most institutions are being very cautious and only lending money to companies that meet very strict criteria. For example, you may need to show that they have been profitable for a number of years, have seasoned managers, include audited financial statements and have other assets. This puts business loans out of the reach of most businesses, at least at this time. So, is there an alternative? In fact, there is.

If your company has commercial or government clients, you may want to consider accounts receivable factoring. Most companies with commercial or government clients share the common problem of having to wait up to 60 days to get their invoices paid. Waiting this long will certainly impact your cash flow, especially if your company does not have substantial cash reserves. Factoring your invoices provides you with a solution to this problem. It provides capital to cover your business expenses without having to wait for your customers to pay you. It also enables you to take on new clients, as you no longer have to worry about net 30 or net 60 day payments.

There are several advantages to using accounts receivable factoring. The most important one is that it is easy to obtain, since the most important qualification criteria is that you have solid customers. Aside from that, it offers a dynamic form of financing. Dynamic financing lines adapt to your sales volume, and increase as your sales increase. This makes receivable factoring a great solution for growing companies that need different levels of financing as their business grows.

Accounts receivable financing can be a great alternative way to finance your company, especially in a tough credit environment.

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.

This has to be one of the toughest times to get any type of business financing in recent history. Although the credit markets are improving and some institutions are starting to lend money, few startups are getting loans as institutions prefer to focus on businesses that have a track record. But even existing businesses are having a hard time obtaining financing. For the most part, institutions will ask for two years worth of financial records, including tax returns. And unless your business can show profitability and excellent growth prospects, chances are that your business loan may get delayed or denied. And if your records show any blemishes – your chances of getting a small business loan will be very low. Basically, institutions are only making business loans to their most promising prospects. But that leaves many businesses that have good potential out of the picture. Fortunately, there are some alternatives.

If your company sells to commercial to government clients, you are probably familiar with having to sell on terms or net 30 days. Basically, it means that you deliver your product or service today but have to wait 30 to 60 days to get paid for it. In the meantime, you still have to cover operating expenses and must continue to pay suppliers and employees until you get paid. This creates a problem for many companies for two reasons. Few companies have enough capital to wait two months to get paid. But more importantly, many companies are rejecting large orders or projects simply because they can’t afford to pay everyone else while waiting to get paid. One solutions to this problem is to use invoice financing.

Invoice financing provides a simple approach to financing your business. It eliminates waiting 30 to 60 days to get paid by providing you with an advance against your invoice. This provides you with capital to operate your business, while you wait for your customer to pay. Once your customer pays, the transaction is settled. As opposed to conventional business loans, invoice financing programs can be approved quickly and put in place in days. Invoice financing is also dynamic since your funding grows as your sales grow. This makes is an ideal solution for certain types of businesses.

We live in a credit environment that is tough. Most businesses, even those that were deemed very credit worthy not too long ago, are having a tough time getting any kind of business financing. Most banks and institutions have been hit by the financial turmoil and either lack the capital – or lack the will – to make business loans until the capital markets settle down. That is part of the problem however, since many businesses in the USA and Canada depend on business credit to function. Without it, they run into problems. This has lead to a vicious cycle, where the lack of small business loans is furthering the problem.

What can you do if your business needs financing but you can’t get a business loan? You have no other options than to look for alternatives. One of these alternatives is invoice financing, commonly known as factoring. Invoice financing can help your if your company sells to commercial or government clients (rather than retail clients) that pay their invoices in 30 to 60 days. As a matter of fact – most businesses would not have cash flow issues or need a loan if their clients paid immediately.

Of course, asking clients for an immediate payment will never work because they expect and demand, net 30 payment terms. Using invoice financing enables you to get an advance on that invoice, and provides the necessary capital to run your business. Invoice factoring enables small businesses who may not have substantial assets – aside from good customers – to get financing even in tough financing environments.

Invoice financing is simple to use. You first need to establish an account with a financing company. Once you have an account, you can start sending invoices for financing. The financing company with give you the first advance on your invoice – usually about 80%. You get the second advance, which is 20% less the financing fee, once your customer pays the actual invoice.

Credit decisions are based on your customer’s ability to pay an invoice. This enables you to leverage their credit. But more importantly, invoice financing is dynamic, and your financing line grows as your business grows.

Do you have clients that take up to 60 days to pay their accounts receivable? Waiting months to get paid for your invoices can wreak havoc in your company’s cash flow, especially if you have to meet payroll, pay suppliers and pay rent. But what happens if your business can’t wait to get paid because it must meet its obligations?

One solution to this problem has been gaining popularity recently. It’s called accounts receivable factoring and it allows you to turn your slow paying receivables into cash, almost immediately. It works by selling your receivables to a factoring company, who in turn, pays you on the spot. This provides you with the necessary cash flow to pay suppliers, rent and salaries.

Selling your receivables to a factoring company is relatively simple. It can be done with a 3-step process:

1. You deliver goods/services and issue an invoice
2. You sell the invoice to the factoring company who advances the first installment you up to 90% for them. The average advance is 80%.
3. Once your client pays the invoice, the factoring company rebates the remaining installment, less a small fee (installment #2)

As opposed to other financing products, accounts receivable factoring is easy to obtain and can be setup in a week or so. A critical benefit of a/r factoring is that the financing companies make their credit decision based on your clients. So, accounts receivable factoring is an ideal tool for small and medium sized businesses who cannot obtain bank financing but have a roster of solid customers.

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.

Do you do business with commercial or government customers? If you answered yes to that question, that means that you are also used to waiting up to 60 days to get your invoices paid. One of the most challenging facts of doing business with big companies is that they pay slowly. Sure, they pay all right – they just take their own sweet time to do it.

But you have expenses that you have to pay now. Suppliers need to be paid. Payroll must be met. This creates a big challenge for small and medium sized businesses.

Is the solution a business loan? It seldom is. They are hard to get. And when you get them, your hands are tied until the loan is paid off. With business loans, you can only get one at a time. So if your business grows and you need more money, you are out of luck.

If your biggest headache is slow paying customers, a better solution is to factor your receivables. 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.

Receivables factoring works on a simple premise. Your invoices are valuable assets that can be financed. Basically, the factoring company advances you money for your slow paying invoices and waits until your customer pays. Of course, they charge a small fee for this service. This is how it works:

1. You do your work, as usual. You bill your customer but then submit a copy of the invoice to the factoring company for financing
2. The factoring company provides you an immediate advance on 70% to 90% of the invoice (there is a 10% to 30% reserve). You can use that money to meet payroll and pay expenses.
3. The factoring company waits to get paid by your customer
4. Once they are paid, the transaction is settled and the factoring company rebates any reserves.

As you can see, factoring gives you immediate money for your slow paying invoices, enabling you to run and grow your business. Qualifying for factoring is really easy. The biggest requirement is to do business with credit worthy customers. So, if your customers are good (but slow paying), you can finance them.

Receivables factoring is a great tool to finance your business and grow it to the next level.

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.

Having liquidity – the necessary funds to pay suppliers, employees and regular business expenses is critical the success of a business. However, getting business financing has always been a challenging proposition for business owners. And given the current credit environment, obtaining a business loan is very hard. Banks and corporate finance companies are only providing business loans to large corporate clients that have substantial assets.

Liquidity problems are very common for companies that sell to other businesses. In the business to business environment, it is common to offer 30 to 60 days to pay an invoice, especially if your client is a large company. This creates a substantial cash flow problem, since you need to spend money to service your client and then wait to be paid.

There is an alternative. Let’s suppose that you could get 80% of your payment immediately upon delivering your product/service, with the remainder after 30 to 60 days. Would that help your business? Would that provide the necessary cash flow to pay rent, employees and suppliers? A more important question is, would you feel comfortable taking new business if you knew you would get paid quickly?

Accounts receivable factoring can provide the solution. The proposition is simple. You get an 80% advance on your invoices as soon as the work is completed. You receive the remaining 20%, less a small fee, once the invoice is fully paid.

One big advantage of factoring receivables is that it’s easy to obtain. The biggest qualification requirement is that you do business reliable customers. Aside from that your company must be free of liens and judgments. Generally, the set up process takes about a week and after that you can get funding within a business day of submitting a request.

Factoring rates vary and will be based on the quality of your clients and the amount of financing you need. Generally the monthly costs will be between 1.5% and 3% depending on these variables. As rule of thumb, factoring can work well if profit margins are at least 15%.

Receivables factoring provides a great solution for a specific problem – the gap generated between invoicing for services and receiving payment. If you have clients that take up to 60 days to pay, and you need financing to cover business expenses, factoring is a good alternative to conventional business loans.

Do you own a company that is growing quickly? If your company were a car, do you feel like you are pressing on the accelerator while at the same time stepping on the brake? Or worse, that your growth is stuck in neutral?

Slow cash flow is the biggest challenge to company growth. And business owners, like you, know that the biggest cash flow problem is having to wait up to 90 days to get paid by your commercial and government customers.

Going to the bank for a business loan won’t help much, unless your company has a great past history. This is because banks give business loans based on past performance. What you need is a financing product that can finance your company based on its future potential. And who better to evaluate your future potential than yourself? This is where receivables factoring can help you. This is because, receivables factoring is self-financing.

Receivables factoring, also known as invoice factoring, works by eliminating the 30 to 60 days it takes for commercial clients to pay you. It enables you to get a substantial portion of the money owed to you within a day or two of invoicing, providing you with funds to pay rent, meet payroll and more importantly – expand your business.

Imagine if you could get paid consistently, just two days after invoicing. How fast could your business grow? And without debt. This is how receivables factoring works:

1. You invoice your customers as you always do
2. You send a copy of your invoice to the receivables factoring company for financing
3. The factoring company advances you up to 80% of your invoice (20% is not advanced to cover potential disputes, etc.)
4. You get your money right away. The factoring company waits to get paid by your customer
5. Once your customer pays, the factoring company rebates you the 20% reserve, less a small fee

Factoring can be a very cost effective way of financing your business. The factoring fee is based on three factors:

1. The credit quality of your customer,
2. Your monthly volume and,
3. How long it takes customers to pay your invoices.

As a rule of thumb, monthly costs can go from 1.5% to 6% per month depending on these criteria.

If you own a company that has a lot of capital tied in slow paying receivables and if you need financing right away, you should consider factoring your invoices.

Obtaining business financing has always been challenging for small and mid size company owners. Traditional sources of financing, such as venture capital companies, angel investors or banks, provide financing that is hard to obtain and usually takes weeks – or months – to set up.

Angel investors and venture capitalists, although more generous than banks, only provide capital if you are willing to give them an ownership stake in your company. Usually a big one too. Banks don’t demand an ownership stake. Instead, they will only lend you money if your company can show a three-year track record of profitability and if your personal credit record is spotless.

But, what if you don’t want to give up ownership and if you don’t meet banking requirements?

There is an option that is growing in popularity – and it provides you with easy to obtain financing. It’s called accounts receivable factoring. Factoring is an ideal tool for companies whose biggest challenge is that they cannot afford to wait 30 to 60 days to get paid by customers. By factoring your receivables, you can get paid in as little as two days. This helps business owners to easily meet ongoing obligations such as payroll and rent, and allows them to grow the business. In effect it eliminates the uncertainty of when you’ll be paid and allows you to streamline your cash flow.

Receivables factoring is very different than a business loan or line of credit. Rather than focusing on physical collateral (real estate, equipment, etc.) like banks do, factoring companies focus on your invoices. Are they from good credit worthy clients? Do they pay reliably on 30, 60 or 90 days? If they do, you have a good change of qualifying for invoice factoring.

Accounts receivable factoring is very easy to implement and works as follows:

1. Your company delivers the goods or services to the client
2. You invoice your client and send a copy of the invoice to the factoring company
3. The factoring company advances you between 70% and 90% of the invoice as the first installment
4. Once the invoice is actually paid, the factoring company advances you the remaining 10% to 30% as a second installment, less a small fee

Factoring financing is a great alternative to bank financing and venture capital that is easily available to small and medium sized businesses.

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.