Article Sphere Logo

Factoring is Good for Business

By Expert Author: Kathryn Lang | Article Abstract
Word Count: 328 words | Views: 303 view(s)
It seems you can never have enough money, and factoring is just one more way to meet that goal. The basic premise behind the business idea of factoring is that an owner sells his accounts receivable to get a quick influx of cash. The buyer gets the accounts receivable at less than their actual value. The pay off comes when the accounts are paid in full.

Factoring can be good for the business owner. The sell gives the owner some immediate working capital that would have trickled in otherwise. It also takes the hassle of collecting outstanding accounts out of the hands of the owner. The down side to factoring is that the owner will get less money for the accounts than they show on paper.

Most owners who look to factoring are trying to find a way to smooth out the cash flow and free up time. It basically comes down to a need for having the money now instead of later. The money is guaranteed at the sell of the accounts, and the business owner doesn't have to spend time and resources trying to collect on accounts. Factoring also relieves the owner of concerns about bad debts. Collection is strictly in the hands of the buyer.

The buyer side of the factoring benefits because the accounts are purchased as much as 25% below their face value. This is a nice profit on a short term investment. It is also likely that a company interested in factoring has streamlined the collection process - making the process much more cost effective.

Factoring is not for every company, nor every investor. The best route for factoring is to find a company that specializes in this investment process and develop a relationship with it. It would also be wise to consult with an accountant to see if the process of factoring could be a money saving tool for your business.
Kathryn Lang

About the Author/Author Bio

Kathryn is a freelance journalist covering business and finance issues, specializing in subjects such as factoring and ecommerce.

Article Source: http://www.articlesphere.com/Article/Factoring-is-Good-for-Business/98359

Article Tags: factoring

Article Submitted: 2007-07-23 | This Article has been viewed 303 times.

Rate Article

Related Videos

Learn about Invoice Factoring and Account Receivable Financing
How Health Factors into Life Insurance Coverage and Cost
Starting a Business - the Money Factor
Telling the Insurance Company Things that may Affect Health Coverage
Being A User On Someone Else's Account
 

More "Factoring" Related Articles

 
 

Listed below are more articles related to the above article from the "Factoring" article category.

People interested in the above article "Factoring is Good for Business" are also interested in the related articles listed below:

 
Accounts Receivable Financing - Secrets explores the little known world of factoring and purchase order financing. Many businesses and their bankers are unaware of the potential for exponential growth when these financing techniques are revealed to supply the missing capital needed for businesses that sell goods or services to other businesses.
When it comes to lawsuit advances, settlements, annuities and similar time sensitive investment items there are several options note holders must be aware of before making a decision.
Accounts Receivable Financing- The India Connection explores the vast growing marketplace in India and how you can benefit from this trend by importing goods or exporting goods to this ginormous economy with accounts receivable financing.
Explores how to grow your government contracting business exponentially with accounts receivable financing. Various techniques to create a win-win situation are analyzed.
Accounts Receivable Financing- Yesterday explores the time value of money and how timing issues regarding cash flow can affect the success of your B2B business. Several technical issues regarding timing and the commercial finance marketplace today may be key factors in the challenge to profitably growing your business.
Invoice discounting is not for all companies. The expense of collection still falls on the client company, as does the hassle of making the collections. It does offer cash in advance of collection, and for that reason alone it is sometimes the best option.
Businesses in a variety of industries often find that funds tied up in outstanding invoices could help them meet immediate financial obligations. Providing a service to customers usually warrants immediate payment, however most businesses offer billing at a later date to secure more sales.
 
Article Directory Home All Categories Finance Factoring
 

Can't find what you're looking for? Try Google Search!
 
Copyright © 2005 - by Larry Lim, Singapore - Article Search Engine Directory at ArticleSphere.com™
All Rights Reserved Worldwide. All Trademarks and Servicemarks are the property of the respective owners.

Afrikaans Albanian Arabic Belarusian Bulgarian Catalan Chinese (Simplified) Chinese (Traditional) Croatian Czech Danish German English Estonian Filipino Finnish French Galician Greek Hebrew Hindi Hungarian Icelandic Indonesian Irish Italiano Japanese Korean Latvian Lithuanian Macedonian Malay Maltese Dutch Norwegian Persian Polish Portuguese Romanian Russian Serbian Slovak Slovenian Spanish Swahili Swedish Thai Turkish Ukrainian Vietnamese Welsh Yiddish