Is Factoring Receivables Beneficial?

Read this phenomenal article from Gaebler.com

Factoring receivables can get you out of a cash flow crunch in a hurry. For the peace of mind of knowing that you have money in the bank, the cost of factoring receivables is well worth the price.

The business is keeping its head above water, but cash is tight and another bank loan just isn't an option.

The cash flow pinch has your back against the wall and you're starting to wonder whether you have any options left.

Well, you might have one more option before you throw in the towel. It's called factoring receivables and it may be a good way to generate cash in a hurry for your business.

Sooner or later every small business finds itself in a cash flow crunch. It simply comes with the territory. For many small businesses, factoring receivables provides a way to turn non-liquid assets (i.e. accounts receivable) into instant cash.

Here's how it works: Under certain conditions, factors (factoring companies, finance companies, or other business entities) may be willing to purchase your business' accounts receivables, giving you cash for a certain percentage of your receivables upfront with the remainder (minus a fee) to follow as payment is received from your customers. In theory, it's a win/win transaction: Your business gets an instant injection of cash and the factor earns a fee for their services.

In practice, however, the decision to factor your receivables isn't a slam dunk. Stay tune on the tips on how to make it easy!