Unfortunately it’s still a best kept secret of business financing; invoice factoring. With all the financing available the concept of factoring accounts receivables for operational cash flow is still not widely considered. The transaction is very easy to understand, simple to set up, flexible to use, and becomes critical to the many companies who stumble onto it.
While there are so many types of financing available; bank term loans, revolving lines of credit, loans with warrants, asset based loans, direct public offerings, mezzanine financing, private placements, all sorts of equity participation, a company looking for outside capital has to be aware of, and have some basic understanding of the benefits and drawbacks of all forms of financing before choosing one method.
Be advised, factoring is a tool that is perfect only for certain situations. Capital intensive requirements like labor costs and product purchases are ideal for growing companies seeking to use the factoring model.