Factoring is more expensive than bank financing but cheaper than equity financing.
A factoring relationship generally lasts 1 to 3 years during the most dramatic growth period. However I have set up some clients that have been utilizing factoring for over 6 years straight. A factoring client usually graduates to conventional bank financing when growth levels off and balance sheet ratios fall into a more conservative range.
A good factoring company will become an outsource of credit, collections, and accounts receivable management. These services such as generating monthly statements to all your customers can save you money in two ways. First, clients feel they can get by with less administrative staff if the factor is doing the above services. And secondly, the typical growth company wants to concentrate on its products and sales and looks to outsource other needs. An astute factoring client quickly learns how to pass through factoring costs to his or her suppliers by negotiating larger trade discounts.
Factoring offers numerous benefits and is worth looking into for your cash flow solution.
Get a free Factoring quote by Clicking this Link
Questions: 888-603-0055
Thanks for reading!
No comments:
Post a Comment