Sometimes obtaining business capital and growth capital with a traditional line of credit is difficult, if not impossible.  One way to survive and grow in today’s economic environment is to enter into factoring.  Factoring can be an alternative to conventional lending to help bridge the timing imbalance between income and expenses.

So how can factoring help with business growth?

  1. Quicker Accounts Receivable:  Instead of waiting 90 or more days to get paid from your customers, you receive cash immediately, allowing you to grow your business easier.  It can also allow for you to take advantage of volume and early payment discounts.
  2. Easier Qualification:  Even int the best of times, qualifying for a bank loan can be challenging.  What sets factoring apart is that qualification is based on your customers’ credit, not yours. Why? Because factors do not lend money, rather they buy invoices.
  3. Added Flexibility:  Factoring is a means of accelerating payments you’ve already earned, and it can be turned on or off whenever you like.  You pick and choose how often and what invoices  to factor – you can factor all your invoices one month and none the next.  Whenever you need cash – to meet payroll, buy inventory, or  fund a new opportunity – all you need to do is factor an invoice or two.
  4. No Debt Incurred:  Since factoring is not a loan, you are not occurring any debt, which allows you to keep your balance sheet looking good.
  5. Credit Analysis:  Factors runs credit checks on all new and existing customers, which can help you minimize bad debts by setting appropriate credit limits and credit terms to risky customers.
  6. Receivables Management:  Factors take the burden of collecting and processing payment on invoices, which leads to a reduction of overhead costs . Additionally, the factors then provide collection reports for all payments.
  7. Costs:  Fees associated with factoring are more competitive among other financing options, such as merchant cash advances.  Additionally, factoring is less costly than equity.  It does not dilute ownership in a company and usually costs lower than associated returns an investor expects.

If factoring sounds like a good alternative for your company, contact us today at 504-522-6065 or [email protected].

Founded in late 2003, Cash Flow Resources, CFR, is a private commercial factoring company serving local and regional businesses, primarily in the gulf south.  For more than 10 years, CFR has supported businesses in need of financial support and guidance, including existing, start-up, early stage and high growth businesses.  In addition to factoring, CFR provides consulting and accounting services to compliment factoring to ensure clients make the best of their relationship with CFR.