Post a new topic
    2 Replies Latest reply on Dec 23, 2008 11:06 AM by Chris_Black

    Need cash for your business, here is some info on factoring.

    Chris_Black Newbie
      What is factoring? (Taken from Wikipedia)

      Factoring is a word often misused synonymously with accounts receivable financing. Factoring is a financial transaction whereby a business sells its accounts receivable (i.e., invoices) at a discount. Factoring differs from a traditional lending in three main ways. First, the emphasis is on the value of the receivables, not the firm's credit worthiness. Secondly, factoring is not traditional lending - it is the purchase of an asset (the receivable). Finally, a traditional funding involves two parties whereas factoring involves three..

      The three parties directly involved are: the seller, debtor, and the factor. The seller is owed money (usually for work performed or goods sold) by the second party, the debtor. The seller then sells one or more of its invoices at a discount to the third party, the specialized financial organization (aka the factor) to obtain cash. The debtor then directly pays the factor the full value of the invoice.

       

      What does factoring really mean?

      Basically, factoring is a company assuming the risk of your invoices completed and pursuing the final collection of the balance. You get between 70% and 80% of the value of the factored invoice up front, the repayment terms are then agreed upon between the two. This means that acceptance is based off your customers, not your own credit.

      It's highly popular outside the United States and has been around for over a hundreds of years; however, it's just now making a surge in the states.

      What are the benefits?

       

      Instant cash for payroll, supplies, expenses, expansions without waiting for payments to arrive.
      Discounts from suppliers for early payment.
      Reduced overhead contacting and collecting invoiced amounts.

       

      This process has been refined to be based upon your credit card receivables, and your credit card history.

      Contact me for further information.

      Chris Black
      Projects Director
      Making Obstacles Manageable, Inc.
      cblack@m-o-minc.com
      www.ourbusinessloan.com
      (866) 942-9199