Why Factor?

THE MANY ADVANTAGES OF FACTORING TO YOUR BUSINESS

Often times it is unclear to a business owner the advantages of factoring. Below you will find a brief list of some of the many reasons that a young company should factor and how it can benefit from the relationship.

Factoring creates no debt

When a company takes out a line of credit with a traditional bank, that loan creates a debt. This debt will then appear as a liability on all credit searches and is often viewed negatively. When you contract the services of a factor, you are really selling your accounts receivables. Since you accounts receivables are really tangible assets that you own wholly, their sale creates no debt. Your cash flow increases without the addition of liabilities.

Young companies often cannot qualify for traditional financing

When a company is young and just beginning to grow significantly, there is a high likelihood that the company will be considered a high risk by traditional banks. It is possible that the company still has a negative net worth or has experienced recent financial difficulties. However, the company may have quality account receivables that are ideal for factoring. This creates another option for increased cash flow and money to continue business expansion.

Factoring allows a business to grow much quicker

Your company may be growing fast and may have contracts with some of the largest companies in the world. These companies know that you need their business and won't complain about the length of time until payment. However, realistically it can be a severe hardship for your payroll and ability to finance further contract is all of your capital is tied up in invoices awaiting payment. By using a factor your capital can rotate much faster and invest in your business much more often. This allows your business to undertake additional projects that would be impossible without the services of a factor.

Increased cash flow allows you to save money with your suppliers

Contracting the services of a factor improves your companies cash flow. With this increased available cash your company will be able to pay its suppliers much quicker. This often allows you to take advantage of early payment discounts offered by your suppliers. These savings add up quickly and can significantly add to the bottom line of your company.