Business owners often have many questions when it comes to factoring, since it is a form of financing that is unfamiliar to many. They want to understand the practice and how it will affect their business now and in the future. Being prepared to answer their important questions will help you make them comfortable with factoring and more likely to want to do business with you. Will factoring work for my industry or specific business? Factoring is a viable financing option in many industries, including manufacturing, medical, construction, oil and gas, temporary staffing, trucking and freight, technology, and clothing and textiles. While each industry has its own challenges, they tend to share commonalities which make factoring … [Read more...]
When Factoring Won’t Fit: A Look at Alternative Cash Flow Lenders
OnDeck. Rapid Advance. BlueVine. You can hardly turn on a television or radio or conduct an Internet search for factoring without these and other cash flow lending sites popping up. Alternative lending has become a highly publicized and, dare we say it, popular funding option for businesses to pursue. Great, you say. Why should I care? Over the last two months we covered a variety of situations that make a traditional factoring arrangement difficult, if not impossible, to close. Cash flow lenders can fund those deals that factoring companies are unable or unwilling to touch, adding another arrow to your quiver of resources to benefit your prospects. Alternative lenders can work with nearly any deal, including small medical deals; … [Read more...]
The Blurred Lines of Factoring
Factoring is one of the oldest known business practices that date as far back as the Ancient Roman Empire when merchants would enlist the help of collectors to settle trade debts. The Definition of Invoice Factoring Factoring is generally defined as an arrangement whereby a factor purchases an account(s) receivable from a business at a discount to the face value of that receivable. The factor earns a fee based on the number of days that receivable remains unpaid. Effectively the business is no longer dependent on the conversion of the accounts receivable to cash from the actual payment from their customers which takes place on typical 30 to 90 day terms. Today, factoring is used more than all other types of business financing combined. … [Read more...]
Why Factors say YES when banks say NO
Have you ever heard this from a prospect; "Don't waste your time, I am not bankable?" Did you then wonder why a factor would ever consider funding a company that a bank would decline? If you have, believe me, you are not alone (I get asked this all the time). Let me see if I can help clear this up. Let me begin by defining a strong banking prospect: Prospect has been in business for a minimum of 2 years Prospect has audited financial statements reveal solid profit margins in the previous 12 month accounting period Prospect has steady revenue growth with no "Peaks or Valleys" Prospect's management team is strong with a proven track record of success in the industry Prospect has absolutely no bankruptcies or judgments in the … [Read more...]