How Factoring Helps Businesses Thrive

Small businesses often struggle with cash flow. Even if you have plenty of customers who owe you money, it can be challenging to find the liquidity that you need. The good news is that you have options. For instance, factoring can provide you with the cash flow you need, but there are a few things you need to know about this financial tool.

What Is Factoring?

Not sure what factoring is? Really, it’s nothing more than leveraging your accounts receivable (money you are owed) in exchange for cash today.

How Does Factoring Work?

The process is actually relatively straightforward. Because it does not hinge on you or your business, but on outstanding invoices, there is no need for a credit check, or the use of assets to secure funding.

The first thing you will need to do is locate a factor willing to work with your business. Next, you will need to provide invoices that are due. The factor will buy those invoices, providing you with the liquid capital that you need. You also benefit from the factor taking that invoice and the billing process for that client off your hands, which saves you time and hassle.

Why Consider This Type of Financing?

Why should you consider factoring? While it’s not right for all small businesses, it can offer a range of benefits. For instance, rather than waiting the usual 30, 60 or even 90 days for your money, you can have it now. You also don’t have to worry about slow to pay clients, and if the client/customer fails to pay, the factor will be the one to deal with collections.

As you can see, working with a factor can ensure that you have access to the liquid capital your business requires for growth and stability. To learn more, contact ASA Capital Funding.


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