What exactly is “factoring”? Factoring is a business financing tool which helps accelerate cash flow while also alleviating administrative costs and other issues associated with collection activities. Here’s how it works: a factoring company buys your invoices (accounts receivables) for a lump sum, and at a discounted rate. You then have immediate cash, and the factoring company now takes on the task of collecting from the clients who owed you on your invoices.
Consider these five good reasons for factoring your receivables:
1. Compared to other forms of obtaining capital, factoring is the fastest and easiest process. You normally receive the factor within twenty-four hours, depending on the approval (approval is based on your clients’ payment history, and your profit margins; the better the client payment history, and the better your profit margins, the better the approval).
2. Factoring is not a loan, but is a debt-free process that enables you to add capital to your business quickly.
3. Factoring reduces the stress that comes from having insufficient cash to run or grow your business.
4. Factoring is based on the financial strength of your customers and not your personal and/or business credit rating.
5. Factoring enables you to concentrate on operating your business (which includes paying your own bills) instead of collecting money from customers.
Unpaid invoices from credit worthy clients are an asset that can be converted into immediate funds. Invoice factoring is an excellent means by which you can trade those unpaid invoices for cash, and without generating any debt as you would with a loan.
The Jayaram Law Group routinely and successfully assists its clients in their business-to-business (b2b) collection needs. We take pride in obtaining payment on accounts receivables without fracturing critical business relationships or engaging in time-consuming and costly litigation efforts.
If you need business debt collection services conducted in a professional manner, contact our B2B (business-to-business) debt collection law firm by calling 312.454.2859 or visiting www.jayaramlaw.com.