Cash on hand is a business’s biggest need?

Posted in: Factoring Companies, Invoice factoring, Oilfield Business Financing- Jun 12, 2013 No Comments

Cash on hand is a business’s biggest need, and when it doesn’t come quickly enough, there is a easy and proven method to get cash fast on your receivables. Factoring is a cash flow tool that can be used by a wide variety of businesses because of the many different services it provides and the capital/cash flow it can free up.

If you ask most Americans regarding the status of our economy, you will probably get a variety of answers. Despite the recent announcement that we coming out of a recession, economists are telling the American public that there is light at the end of the tunnel and the Federal Reserve is trying desperately to keep the economy from stalling. However, start asking the question to most businesses and they might tell you that business is down.

When the economy shows signs of a sluggish trend, one of the first things to slow down is a business’s cash flow. Businesses that are not prepared to creatively raise additional working capital may be in for a rough ride when their receivables begin to trickle in.

As we all know, most banks have been stockpiling their loan loss reserves over the last several years, and with good reason. It would appear that they are going to be dipping into those reserves to help get them out of loans that they really had no business writing in the first place.

Credit at most commercial banks is being tightened almost to point of extinction, which leaves many struggling businesses with few available alternatives for improving their financial standing..

Accounts Receivable (AR) funding, a financial tool now commonly referred to as Factoring, it has been in use for centuries.

Factoring is a cash flow tool that can be used by many businesses, not just small struggling operations, but even your medium sized businesses. Many businesses factor simply because of the support and services it provides and your companies resources it can free up.

What basic qualifications does a business need to have in order to be a candidate for factoring?

They must be selling to other creditworthy businesses. The product or service must have been delivered and accepted. The factor must be able to obtain a priority collateral position on the receivables. The customer may not have any rights to return or offset payment on the product or service.

Factoring has evolved greatly over the past decade and can be very competitive with conventional financing. Factoring companies even participate with other lenders in workout situations or to provide the needed financing to assist a business over a hurdle.

It should be made clear that factors are not in competition with conventional lenders. There are certainly some businesses that factoring is not an ideal solution while other industries are dependent on factors for their day to day business needs.

For businesses that can’t afford to play banker to the likes of IBM, Microsoft or other companies who may also be struggling with their cash position, factoring is a sensible solution.

The next time you have a client who is having difficulty meeting their obligations, perhaps factoring should be given some consideration.

Apply Today for your cash on hand needs.