Saturday, March 30, 2013

What Is Factoring? - Benefits of Alternative Business Funding

Simply factors transacts business for others. Factoring (also invoice discount), also known as debtor finance, cash flow, financial, business since the 1700s raised major components of capital has Economically Baby Boomers, recession, and depression have lived since then. Currently, companies often about misunderstandings, or completely, in ways they consider benefit is available during limited hours. Reflect the book debts of financially weak companies own one of these misconceptions.

That sometimes occurs, but more often Yuldo not from a company focused on growth than is These, in peak season, get a discount from suppliers and prepare an inventory of the equipment upgrade, producing and selling more products or services to be able to businesses that need to improve cash flow.

Traditionally, it takes a long time to pay the invoice debtor business can lose money due to financial, staff and overdrafts. You can be a solution to the problem. Goryeohaeyi Can be used. Customers the burden of debt in order to avoid for their own accounts receivable yuldoeul When they perform this task, they will not be able to borrow money. Book Debt Factoring companies purchase from the company. Consider the company will receive a discount. Other company gets the cash from the sale of accounts receivable. It can be paid quickly, you can avoid the problem of long invoices

Consider the wholesale, manufacturers, distributors, or service in the industry, the company that operates using accounts receivables can be helpful. New company may have to consider the oriented growth will be most helpful in a negative net worth, or Can be used to increase his cash from operating losses can be shut down, because the rapid payment of creditors, or permit the sales and production.

Business Projects

Recession. Cash flow crisis. Small business bankruptcy. Interest hikes. Such words and phrases common in the current economic environment. Now is when the stress on the business owner. Will be affected in a negative cash flow on these trends. Restrict lending policy, the debtor's slow payment, and it also hurt when pressure on the payment of creditors by the size of the companies do not care does not.

If you're not able to provide the cash flow growth, the difficulty to raise funds to operate the business owner. One is set on the bank, but financial security for loans to doctors have in brick and mortar institutions. Another possible solution is the movement of capital in exchange for control on the part of capital and business partners to take.

Neither of these options attractive, or, if possible, considering the can be used to convert credit sales into cash and provide instant capital and business.

May be to consider the answer to this situation;

Can predict cash flow *.

* Lower the debtor to pay.

Not to collect a debt due to the limitations of manpower *.

* Can not meet the criteria for a loan from the bank.

* Lack of cash flow.

* Due to poor cash flow, you will not be able to fulfill the bulk orders.

* Loan limit has been reached.

* Overhead is high.

* Accounts receivable taking up too much management time.

* Low on the accounts receivable management strategy.

* Unwilling to take on more debt.

* Because of low cash flow, you will not be able to invest in new equipment.

* Suppliers discount low cash flow catch can.

* Lack of credit checking procedure.

Who Factoring in benefits

Growth-oriented companies - consider the extra cash allowed to expand production and improve profits, or increase the number of customers.

Will not be able to secure a bank loan companies - consider factors such bank, rather than a judge to pay the debtor's ability to focus. Must consider both the ability of the owner of company assets or loans that can be repaid for financial evaluation.

Can be used, if necessary, to make tax payments tax problem in the company - immediate cash, consider

Additional capital can not? Company - you can quickly get to consider using the additional capital.

Consider the benefits

Increase in sales and production - consider the extra cash flow so that you can buy all the equipment necessary to take large orders and extended to provide that the company may want to invest. For increased production company can be more profitable.

Purchasing power increases - bulk buyers often small companies typically receive can not be eligible for a discount. Obtained from taking into account capital will allow the company so that you can import vendor discounts for bulk orders.

Improve credit rating - can be an advantage of a strong credit score Yuldo The company to pay its bills in a timely manner and without the need to rely on debt can be a big purchase.

Consider the operating principles

Factors can be deposited directly into your bank account cash and sell your book debt. Products or to provide a complete service whenever you task is complete. Report the current status of the debtor can be maintained. Factoring has several advantages over other types of financial

: The different types of financial

Your flexibility is limited.

You will need to borrow money.

Must meet the monthly payment obligations.

Unless you negotiate your loan will not be able to obtain additional funding.

With: Factoring

3rd not to worry about monthly payments.

Any debt does not occur.

Increase your cash flow.

You can improve your credit.

You can receive funds quickly without the need to wait for the approval.

Elements you how you can control.

Consider the cost-effectiveness

Factoring in the cost of finance be a cost-effective means. One of the reasons is that a program designed for each client's own specific cash flow requirements. Keep the cost down, another point to consider is tax deductible nature. Finally, elements of cash discounts from suppliers for additional savings that many companies use.

Some of the following reasons: * The following goryeohaeyi the effective cost is called

Up to 80% of each invoice may be considered *.

* Real estate in the form of security is not required.

Reserves of * money can be in your bank account within 24 hours.

* Most uieul consider the contract for another year.

* This may not be the maximum amount and minimum can be as low as $ 20,000.

* The application will determine the cost.

* There are no hidden costs or additional costs. Element may have a specific cost structure off the cost of building.

* Elements in the record have all received the payment confirmation.

Types of businesses using a Factoring

Companies of all sizes, from small to mega-corporation, yuldoeul.

* Start-up consider using.

* Consider his growth in the company benefits fast.

Factoring companies can not get bank loans * can be set.

Factoring company collect from the debtor's problems *.

Outstanding invoices, get cash

To wait for more than ninety days to pay outstanding invoices can have a negative impact on the company's cash flow. Delay them more interested in the source of funding because the customers pay their invoices. If you are unable to pay them in a timely manner, considering the debt to provide you the necessary cash flow for your business you.

What companies do I need Factoring eligible

The different requirements of each factor, but if the debtor's ledger carries the risk that too many commercial elements to see important. Some of the following will be considered when the judgment.

Your ledger, you must configure a wide range of customers. Ideally, the customer owes more than 20% of the total bill should not.

Ledger's obvious by invoice must Invoice to the customer must be able to verify that.

For more than 90 days past invoice currently does not need to.

Your company more than $ 100,000 in sales on an annual basis.

Only sell a minimum long-term contract, progress payments, retentions, or consignment.

Credit history should be clear.

Bill is fully completed, except for some of the progress payment, service or delivery of goods must.

Your business is not in a high-risk industry.

Other qualifications based on your business.

Customers to show how it is

Customers do not need to know to use the debtor's Yuldo Elements than for the company to pay their bills for a change at the end of their gun guys would rather be. Performed by the third-party accounting staff to focus on the different requirements of customers.

Factoring in the cost of

Consider competitive finance and to manage the collection and provides all administrative services. Loan customers to pay invoices after the rest being paid up to 80% of the invoice value you can provide.

Factoring in the two commission rates and fees. Overdraft interest rates are similar. This is based on drawn funds is calculated daily. The management fee covers the cost of collection management. Costs vary depending on the type and size of the transaction, and is generally considered that the value of the invoice between 0.5% -5.0% range.

Subsequent monthly invoice issued and required by phone or with a letter, management services to customers covers. In addition, the computer regularly to maintain up-to-date on the status of your account, the company will submit a report. Invoice management is handled by the elements of the company can save time and labor.

Customer credit checks

Other methods that can help the company to goryeohaeyi with a credit check. Customer's credit rating will be selected to reduce bad debt before the panmaeyi

Management costs can be reduced.

Can reduce the cost of businesses to outsource the collection of bill payments. Taking into account the customer's credit, postage, maintenance records, and debt collection company can handle. Depending on your business, the management fee than the cost of doing all of these tasks themselves can be saved.

Not abandon the settlement discount

Some companies offer discounts to customers to pay invoices in a timely manner. Factoring If you are using because you can get cash quickly, it will remove the need for prompt payment. In most cases, these payments to a minimum of 24 hours may be subject to change.

A healthy cash flow and facilitating business growth

People can take advantage of yuldoeul debtor:

* Production to increase profits is high.

* To save money using the cash flow you can get discounts of bulk purchases and suppliers.

Funding does not meet the bank's strict lending standards *.

* Take big contracts Thank you for a healthy cash flow.

Debtor invoices fast * without the need to offer discounts to the proceeds can be paid.

* Customer late payment of business debts, need to remove the burden on cash flow.

* The most in a way that benefits their business and future growth looks to use the funds flexibly.

It is important to having a healthy cash flow, strong business. You consider your business to offer a selection of loans listed above and the company all the way from can be helpful. Consider business with a professional service so that you can focus on the core business provides financial services to meet the needs of your can.

No comments:

Post a Comment