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Is Factoring for Me?

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Your company

Is your business growing? Would be an additional capital be helping it grow? Then factoring will be the answer providing funds up to 90% from the worth of your trade debtors. However, factoring is available against trade debts specifically.

The Goods

Factoring isn’t appropriate to any business, may it be product or service, considering the fact that the best option is the simplest and direct kind of product which is easily shown to have been provided through a timesheet or a signed delivery note. Nevertheless, there exist various factoring companies that coordinate with what kind of business they will factor.

The Debtors

Your debtors should be trade debtors given that goods/services are already provided under credit terms of only 90 days. Before an offer is done through a factoring facility, a factor will first look at quality and spread of the debtors. Equally important is your bad debt record, the aging of the sales ledger as well as the overall collection performance.

The Paper Trail

Factoring companies will be serious about your paper trail from the taking of an order to the delivery/provision of goods/services stipulated in that order. It is important that your record keeping is well-maintained and that they can be simply followed through to the issue of an invoice and updating of the sales ledger.

The Cash Flow Requirements

Naturally, considering trade debtor factoring in your company is to boost the cash flow of it. Factoring can get done this in two ways:

a) A cash advance of your client paying through providing them an initial payment as high as 90% against invoices as issued by you.

b) An outsource to the management of the sales ledger could be required for some factors for them to transform your collection performance and at the same time lessening debt return. However there are additional Factors that will leave this facility with you to manage.

Your bad debt risk

Another facility provided by some factoring companies is bad debt protection whereby they will give credit limits to your customers and should that customers business fail the factor will take the bad debt up to the limit set. This is known as non-recourse factoring.

Summary

Below are the main benefits for your business with factoring.

1) A resource for financing the growth of your business.

2)The flexibility by you to take funding through the factor of the agreed initial payment percentage as and when you require the money.

3) Immense earnings by releasing capital.

4)Potential to outsource the administration of your sales ledgerlike the chasing up of overdue accounts.

5)Improved credit control.

6)Bad Debt protection.

7)Improved working capital enables you to agree better terms with your suppliers.

How to get Help

Based from our assessment of your small business, we can tell whether it is factoring or invoice discounting you will benefit for. Do not forget that your service provides are the factoring companies that lets your company leverage the wide array of related financial services which enables your business to prosper and grow by using these facilities correctly. Apart from giving you fair and friendly advices on factoring and its advantages, we also do assessment on your suitability for us to work with you.

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Who is Ideal for Receivables Factoring?

Any small to medium sized businesses that have clients that receive invoices and are apt to be due in 60 to 90 days are typically good candidates for receivables factoring. Why is this? Factoring is based on client invoices, in which you are selling these unpaid invoices that will be due in the next 60 or even 90 days. Third party companies that are known as factors buy these invoices at a percentage providing almost immediate working capital for your business.

So who can take the most advantage of factoring services? Invoice factoring has proven to be highly beneficial in the construction industry as these construction companies need a constant resupply of the appropriate resources. These companies also have many clients that pay on a 60 to 90 day basis, while still needing the steady cash flow. When a cash flow shortage occurs these construction companies are able to turn over high invoices of highly reputable and higher spending clients, almost ensuring the funding will be approved.

Medical supply companies are also excellent candidates for invoice factoring as they are providing goods to clients that most times have a great credit rating. As factoring is going more by your customers’ credit than by your own, this is very important. As medical supply businesses need to maintain a steady stock of products for their clients, it is critical that there is a constant access to funding and what better funding than factoring?

Trucking companies are beginning to take great notice to the practice of invoice factoring, taking advantage of great funding opportunity. Accounts receivable factoring is ideal for these companies because they are providing services to higher chain companies and are more apt to have a larger amount of invoices out at once. Instead of seeking an inconvenient business loan, these businesses are able to receive invoice factoring services to meet their working capital needs.

Any small business that has unpaid invoices soon to be due within the next 60 to 90 days, and wishes to venture out further, factoring could be a great idea. The venture capital obtained through factoring is almost immediate and will be a great way to expand without having to worry about new debt.

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Securing Stable Cash Flow from Larger Jobs with Accounts Receivable Factoring

Every business from time to time takes on new ventures. There will be larger jobs proposing great promise for the business; however, the payment may not always be immediate for these larger jobs. Many times the payment isn’t seen for up to 3 months, causing stress when it comes to incoming capital for operating and venturing out with the business. Accounts receivable factoring is available for these businesses, securing a stable cash flow, even when the larger jobs are taken on. Ensuring that payment isn’t delaying business operation, invoice factoring will allow the business to sell the invoices accrued through these larger jobs, providing up to 90% of the total invoice value calculated as immediate cash for the business.

What is needed to Get Invoice Factoring?

There are many business owners that are turning to invoice factoring, finding it as a much more efficient and stress free method of obtaining operating and venture capital for a business. In order to get invoice factoring for your own business, you only need credible invoices that are due to be paid within the next 30 to 90 days, depending on the factor. Each factor will have their own rates and requirements in order to provide factoring for your business, but there are many to choose from, and several that will even work as a third party addition to your business, factoring invoices whenever you need the funding.

Reasons to Choose Invoice Factoring

There are many numerous reasons to choose invoice factoring instead of bank or institution lending for your business. Specific and common reasons found for small business accounts receivable factoring include:

• Working capital
• Relief from slow paying clients
• Flexible funding resource, increasing with business sales
• Funding for payroll and taxes

There are several other reasons why invoice factoring can be ideal for your small business, including extending credit for your clients, buying equipment and inventory, and even just to extend the business enough to fill more orders. If you are thinking about using accounts receivable factoring in order to increase sales, you will have the benefit of increasing your factoring funding as you increase your sales.

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Tags: Accounts receivable, Accounts Receivable Factoring, Factoring, Invoice, Small Business, working capital

SURETY BOND & FINANCE PROGRAM

CITY AND COUNTY OF SAN FRANCISCO SURETY BOND & FINANCE PROGRAM

OBJECTIVE:
The City and County of San Francisco is committed to giving local small and emerging contractors access to contracting opportunities on City construction projects.

The Surety Bond & Finance Program facilitates this objective by providing you, the contractor, with the tools needed to become competitive in public works construction.

Recognizing that bonding and working capital are the common barriers contractors face when bidding and completing contract, the program addresses these challenges.

The Program benefits both contractors and the City’s economy in a positive way by reducing public works construction costs and increasing job opportunities available to local contractors.  Securing the employment of more local contractors results in a stronger local economy and keeps money cycling within the City.

Program Services Include:

• Bonding and Financial Consultation
• Bid, Performance and Payment Bond Guarantees
• Contract Financing Guarantees
• Accounting Assistance and Referrals
• Individual Counseling and Group Workshops on Contractor Related Topics

For More Information on the Program Contact:
Nancy Owens
Merriwether & Williams Insurance Services
417 Montgomery Street, Suite 200
San Francisco , CA 94104
Phone:  415 986-3999
www.imwis.com

Popularity: 4% [?]

Tags: Bonding, City and County of San Francisco, contracting opportunities, contractors, emerging, FINANCE PROGRAM, ocal, ocal small and emerging contractors, public works construction, San Francisco, small, surety bond, SURETY BOND & FINANCE PROGRAM, working capital