Could a Factoring Company Help Your Business Access the Funds You Need?

Businesses in a variety of industries often find that funds tied up in outstanding invoices could help them meet immediate financial obligations. Providing a service to customers usually warrants immediate payment, however most businesses offer billing at a later date to secure more sales.

The businesses that offer the option to their customers of being able to pay at a later date will frequently choose to wait on their customers to make payment. The billing company will wait out the thirty-, sixty- or ninety-day period that they have extended to their customers or clients, often at peril to their own business credit. Sometimes, the pending invoices will be paid late or not at all. These unpaid invoices often stretch the supplier's financial position to the breaking point. After all, the supplier has its' own bills and payroll expenses it must meet by a certain date.

Some business managers will choose to weigh their need for immediate financing. Financial officers can apply for loans or lines of credit that will allow them to make purchases, pay their own invoices, and meet other financial obligations. But, if the supplier is a new business, getting financing from a bank or other lending institution can be a real challenge.

Business managers will consider an alternative option: working with a factoring company who will enable their company to access the income that is tied up in those outstanding invoices. Factoring companies are a specific type of lender that will purchase invoices or advance money on outstanding invoices from a business, for a percentage of the invoice's current value.

Receivable finance agencies can usually offer up to 90% of the value of the outstanding invoices to a business, enabling it to pay its own bills on time. Granted, this is not a total return on the outstanding receivables, but it does provide money for the business at a time when it may absolutely be needed to pay its' general operating expenses.

The service that is provided by factoring companies has benefited a wide variety of businesses in a number of industries:
  • Repair companies, manufacturing and distribution companies, trucking and transportation fleets have benefited from accounts receivable loans. Factoring loan services allow these companies access to the funding they need for marketing, transportation, and overhead, while they wait for payment from their customers.

  • Growing service companies such as those who provide security guards and temporary staffing can benefit from working with a factoring service company, so that they will be able to meet payroll and other financial obligations while they are waiting for clients to pay their invoices.

  • Businesses that offer medical supplies often are left waiting on payment, while insurance companies and other payees work to settle a claim. With the factoring loan in hand, the supplier can continue to stock necessary products and meet the financial obligations of running its business.

    Working with a receivable finance agency enables many businesses to meet their financial obligations, to conduct marketing campaigns, and to grow while they are waiting for invoices for the products and services that they provide to be paid. Factoring companies enable the success of businesses with unique financial needs to get by and even strive in today's business world.

    Most businesses simply cannot always afford to wait for their clients to pay their outstanding invoices. All businesses have immediate financial obligations that a factoring service can help cover.

    Most businesses may not benefit from applying for a traditional loan or other financial products, because of limited extended line of credit, long time before it's issued , and a variety of other issues. With the assistance of receivable financing provider, the needy business owner is able to pay off his or her own debts within 5 to 7 working days.

    Could a factoring company help your business to secure the funds that it needs in order to continue operating to its full potential? The answer depends, to a degree, on the nature of your company:

  • Is your company struggling with cash flow issues because your customers are slow to pay their invoices?

  • Is your company still in its start up phase - growing with invoices due, but little credit history?

  • Is your business growing quickly, but you're finding that banks and other lending institutions consider your company a risk due to the lack of established earnings and an established history?

  • Does your business see increases sales seasonally and need quick payment on invoices to ensure ongoing success?

    If any of the above or a combination of the above scenarios apply to your business, you may find that a factoring company can give you access to the funds you need, at times when your available cash on hand is scarce.

    Copyright (c) 1st Commercial Credit.
    Toby Seibert writes about commercial finance. 1st Commercial Credit can help you with your business growing pains, with financing rates as low as 1.59%, with no fees and no minimums. They finance invoices from $5,000 to up to $10 million with flexible approval decisions. Call 1-800-450-9653 or visit their website:

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