The lending machines are holding back money. Green currency is gradually vanishing from the pockets of business owners. Just as the economy is stumbling and struggling to get back up, the government imposes more stringent policies. Since the banks unwilling to raise your line of credit, there’s no breathing easy in your current cash crunch.
This article is not intended to alarm you, but the purpose is to inform you of a potential alternative financing method if your business is stuck in the “cashflow mud”. Due to a slow economy, the financial crisis, weak business revenue and lower level of profits, banks have tightened up their lending policy, and now they are rejecting more loan applications than ever before. Businesses with good margins are also being treated the same way! What is a business owner supposed to do? Cash is needed to pay employee salaries, buy inventory and pay other operating expenses. Not to worry, no need for any more sleepless nights, your business will survive! A reliable factoring company is all you need to get you out of your financial mess.
Invoice factoring companies are finance companies that will buy your account receivable or invoices and therefore give you the much needed cash. The amount of cash you will receive will depend on the percentage of advance you take on the invoice face value. Advance rate percentages on invoices can range from 40% to 90%. Unlike investment finance companies or banks, an invoice factoring company will not take a share of your equity, nor will they tie you up in a long term contract.
For providing invoice factoring services, a factoring firm will charge you a small discount fee. Remember this is not a loan, once you get the cash against your invoice, there is no need to pay it back, like you would with a loan. Your customer satisfies the obligation to the factoring company by paying to them the full amount and according to the invoice terms in 15, 30, 45 days etc.
In summary this is an innovative way to obtain working capital funding by selling your assets or converting your invoices into much needed cash - and you didn’t even need to take out a loan.