Many firms struggle to maintain their bank credit facilities, and securing a new line of credit or increasing a company’s current limit is nearly impossible.

So if the lending wells have dried up, what’s a small business owner to do?

Capitalize on the benefits of accounts receivables factoring.

Once a small business owner has been approved by an accounts receivable factoring firm, the basic invoice factoring process is as follows:

1.  A small business owner’s customer requests goods or services from the company.

2.  If it’s a new customer, the business owner should request a credit check and approval by the invoice factoring firm. Once approved, the company completes the service or delivers the goods.

3.  The business owner issues an invoice, reminding the customer that their receivable has been sold to and will be collected by the factoring firm.

4.  The business owner submits a schedule of accounts for purchase to the factor, including the supporting documentation (purchase orders, invoices, time-sheets, etc.).

5.  Upon verification of invoices for pre-approved customers, the A/R factor will advance funds within hours.

6.  The factoring firm provides all accounts receivable and collections services as required.

7.  In most cases, the customer makes payment(s) directly to the factoring company’s lock box.

8.  Upon receipt of the payment, the invoice factor remits the difference (reserve) between the collected amount and the advance, less the discount fee.

It’s easy to get things started. In most cases, the owner needs only to complete a brief application and present a current accounts receivables aging report to begin the process.

As if a quick approval process wasn’t good enough (banks can take months to approve a loan), there are numerous additional reasons why factoring invoices is an attractive alternative financing option for small and medium-sized businesses-the first being that entrepreneurs with less-than-perfect credit can qualify for financing based on their customers’ creditworthiness. This is simply not the case when looking for a bank loan. Traditional lenders review the applicant’s financial strength in combination with the company’s operating history before they are willing to extend credit.

Furthermore, healthcare invoice funding also gives business owners the ability to offer credit terms to their customers. Especially in today’s economy, customers appreciate the value of having a 30-day grace period to make a payment. Because a business owner receives up to ninety percent of the invoice upfront each time he/she factors, their cash flow remains unaffected by the net-30 terms.

Additionally, accounts receivable factoring helps owners build their company’s credit. Once an entrepreneur begins healthcare factoring and has adequate cash flow, he/she is able to pay vendors on time, establishing a good credit history with them. This makes it so much easier for business owners to get credit from other vendors and increases their chances of borrowing from bank in the future.

All in all, invoice funding instantaneously relieves business owners from many of the stresses involved with managing working capital. The ongoing factoring process is straightforward and easily adaptable. Accounts receivable factoring gives small business owners the ability to control their company’s cash flow as the business grows, while simultaneously improving their creditability.

About the Author: Philip Cohen is the founder and president of PRN Funding, LLC, which is an extraordinarily focused niche player in the healthcare accounts receivable invoice financing market place. Through a process known as factoring, PRN Funding provides healthcare business owners with the financial resources needed to grow and effectively compete in the industry. With no minimums or fixed terms, PRN Funding ( http://www.prnfunding.com) provides healthcare companies with flexible and immediate access to capital.

Article Source: EzineArticles: Accounts Receivable Factoring – An Alternative Funding Option For Small Businesses

What The Small Business Owner Must Know to Get Through These Financial Times!

New Book Release by Karlene Sinclair-Robinson, Certified Cash Flow Consultant.

Our current national financial situation makes it even harder for small businesses to qualify for bank financing.

Balancing the scale in this arena is vital, but will it even out for you?

This handy book is here to guide you through the maze of options that might be of benefit to your company.

Instant Download Only $12.95 (or order a hard copy for $24.95 from Amazon here!)

You’ll better understand the various financial options available, and how to access them, including tips on:

• Personal Financing
• Peer-to-Peer Lending
• Microloans
• Asset-Based Loans
• Factoring and Accounts Receivable Financing
• Merchant Cash Advance
• Purchase Order Financing
• Equipment Lease Financing
• Commercial Real Estate Financing
• Venture Capital Financing

You’ll also find valuable information on getting your small business started and the basic principles every owner should know.

Help make your business a success and know your options!

About the Author:

Karlene Sinclair-Robinson resides in Northern Virginia with her husband and two wonderful children, one of whom has been diagnosed with Autism. She spent almost eight years as a business consultant working with small business owners and witnessed their inability to access capital through banks while being unaware of alternative options. She decided to fill the void by writing this book.

Mrs. Robinson is the Managing Member for the business and financial consulting firm, KPR Funding Solutions LLC.

Of course these stats are no surprise to business owners.  Rebuffed by banks, they increasingly turn to factoring and purchase order financing for cash flow needs. The New York Times recently ran an article on the shift, highlighting individual companies that used purchase order funding last year when long-time bank loans had left them standing solo at the financing alter.

This alternative business financing market increased an astounding 80% in 2009 for one of the purchase order funding companies interviewed.

The article, entitled The Places They Go When Banks Say No, (by Andrew Martin, January 30, 2010) can be read at NYT online.

Purchase order (PO) funding provides a cash advance so the business can pay the source company manufacturing the goods. This allows the business to obtain the product, or materials needed to create the product, that will ultimately be delivered to the customer.

On the other hand, factoring provides cash through the purchase of invoices or accounts receivable at a discount for services rendered or products already delivered. Factoring involves funding after performance while purchase order financing requires funding prior to performance.

Both factoring and purchase order funding are in demand during the credit crunch providing opportunity for cash flow brokers and investors. To learn more be sure to read How I run My One Person Factoring Business, by Jeff Callender.