Small Business Factoring Generates Instant Cash

Definition of commercial factoring: the business of purchasing and collecting accounts receivable or of advancing cash on the basis of accounts receivable.

As a small business service provider, you probably don’t have the luxury of that of a retailer where cash is exchanged at the register.  Establishing payment terms with your clients is a necessary policy that hopefully sees payment in 30 days.  Even though payment terms are a two-way agreement, the majority of companies do not pay in 30 and sometimes it can run to 60 or 90 days.

The biggest problem is that ‘your’ vendors are expecting ‘your’ payment in 30 days.  When you are just starting out or are established to the point that you want to expand your business, outstanding receivables can leave you in a cash flow shortage. So how can you turn your receivables into instant cash to meet your obligations?

No Loan, No Debt, No Credit Check

For centuries, factoring has been a staple of business.  In a nutshell, a factoring company will buy your receivables for up to 90% of the outstandings and provide the cash equivalent in less than a day.   Here is how it works.

  • Simply release your payable invoices to the factor who will advance all but 10 to 20 percent of the equivalent in cash. (Read further…you get the majority of the percentage back.) This cash injection allows you to pay your bills on time or invest further into your business.
  • Settle on terms for the carrying costs that the factor will incur. For instance, a receivables amount of $10,000.00 can cost as little as $200.00 over a 30 day period.
  • The factor now assumes the responsibility of collecting the outstanding amounts through their own resources that significantly reduces the administrative burden and cost of operating your receivables department.
  • When the factor collects the funds from your customer, they return full payment to you, less the advanced amount and carrying costs.

You are not applying for a loan.  A credit check on your business is not necessary although most factors will perform checks on your customers listed on the invoices.  There is absolutely no debt incurred by your company.

100% Safe Business Strategy

Factoring is a simple way of keeping your operating capital at a level that allows you to grow your business.  It takes away the worry of having negative credit bureau reports from your vendors along with the ability to meet your payment obligations.  Then, when you are ready to approach a financial institution for more equipment, inventory or anything else that improves your business, your credit status is seen only as favorable.

K-1 Financing has been providing financial assistance to many small businesses at a fraction of the cost of any lending institution and without all of the hassle.  We offer flexible agreements and an on-line portal that allows you to monitor our collection results.  Contact us for a free consultation that will keep your small business off the worry wagon.