Receivables factoring is the process of selling your open receivables at a discount in an effort to not have to wait on the customer to pay to increase cash flow. It is a tool that has long been used by business with a slow receivables turnover ratio to bridge financial gaps. While the interest rates can be high, there are advantages of using factoring as a funding tool.
There is no need to submit a credit report or other risk mitigation steps. This means even businesses with poor credit could qualify for funding and be able to bridge that cash flow gap that comes with slow turnover.
Decisions Made on Individual Invoice
Factors can quickly asses, based on the history of the customer and the client, whether or not the invoice is likely to be paid, and thus whether it is eligible. The process happens in minutes and funds could be deposited by the next business day for those invoices that are approved.
Pay When Times Are Good
The full amount is paid when you collect your revenues. It can be paid quickly or over a longer course, depending on your business success.
Factoring has grown in popularity, but they cannot replace business financing such as small business loans completely. Biz2Credit can help you find the lenders you need with the financing options that are right for you. Visit Biz2Credit.com today to get started.