Finance Roll

Many companies look to stay competitive in the world of today's business, many do so by unleashing the graces of cash flow. Accounts Receivable Factoring helps you do that. Factoring increases the cash flow by transferring the responsibility for the collection of your customer's debt and turning it into funds available for immediate use. The company will lend you money on your discounted accounts receivable and they will keep a percentage after they are collected.

Accounts Receivable Factoring is attractive for a series of reasons. The most popular benefit is the increment in working capital. You do not have just anyone looking after your accounts receivable, but you have professionals doing it. Their expertise guarantees that you collect your money faster that you would using your own resources.

If you are a small entrepreneur, you would be highly attracted to Accounts Receivable Factoring. It will enable you to have a greater liquidity to face go about the daily activities of your company. What once was in the hands of your customers, now turns into funds that you can use to pay your bills, your employees and use for investments. Having your people collecting that money and you paying for the costly process is not a profitable option.

When considering the benefits of Accounts Receivable Factoring, we suggest you study in detail what Factoring companies have to offer to you, what they ask in exchange and if it is an appealing path for your company to follow. Many companies have enjoyed the benefits of AR Factoring and yours could too.

Factoring is an investment that has a cost. The price tag on factoring services obeys to a series of considerations done by the company. Your business is appealing to them when the benefits are higher than the risks they are taking and the costs it implies. They generally charge you from 65% to 90% of the total amount of your accounts receivables. Any given amount is always the result of conversations with the Factor and agreed upon the basis of the interests of both parties.

When looking at your proposal, the factoring companies will look at the following information:

Financial stability of your clients. The factoring company takes higher risks when the ability of your customers to pay their credit is limited. In short, customers with bad credit require more investment from the Factoring Company to collect.

The dollar amount being factored plays a large roll in the fee for the service.

If your commitment with them is long or not. The longer the better. The factoring company will see positively the fact that you stay with them for longer rather than shorter time and therefore they reward you with attractive interest rates.

Make sure you study the pros and cons of factoring for your company, and when you decide to enjoy the benefits of Accounts Receivable Factoring do not forget to read the small print.