Every business has cash flow needs but options are dwindling in the face of a recession.   Fortunately savvy business owners know they can still raise cash when banks say no to business financing.

It is helpful to understand why more businesses are benefiting from factoring their invoices and account receivables in 2009.

The key to many of the benefits that accompany factoring is the distinction between selling an asset and obtaining credit.

Rather than a bank loan, the business sells the right to receive payment on outstanding invoices to a factoring company (See How Accounts Receivable Funding Works for more information).  

Here are the top 10 benefits to factoring invoices:

1. Obtain Cash Without Debt
2. No Credit Limits
3. No Long Term Contracts
4. Use of Funds is Not Restricted
5. Pick and Choose What Invoices to Factor
6. Strong Financials not Required on Business
7. Available to new and non-bankable businesses
8. Avoid Extending Invoice Terms to Questionable Customers (Most Factoring Companies will Underwrite the customers ability to pay)
9. Low Factoring Fees
10. Receive Cash Fast (usually within 24 hours on established accounts)  

By not increasing debt and freeing up much needed cash, it’s easy to see why so many businesses are using factoring to pay bills, fund growth, increase sales, meet payroll, maintain a good credit rating, or take advantage of early payment discounts.