One of the best parts of receivable factoring is the ability to grow a company and not be hampered by credit availability. With a bank, your company is issued a credit limit that is based on historical financial information like tax returns. Once you reach your limit you must apply for an extended limit or find a new bank that might qualify you for a higher credit limit.
By working with a factoring company you do not need to worry about your credit availability, you only have to pay attention to the creditworthiness of your (customers) account debtors. The factor will provide up to date reports based on the public information available for each particular customer. This allows the factoring client to determine what sort of sales terms they might offer. As long as the customers have decent credit, you will be able to grow the account to the limit of the customer’s credit.
This has the added benefit of not extending credit to customers who would otherwise not be able to borrow from any other source. The old saying is – someone with bad credit will buy anything on terms. – Being able to gain access to capital while growing at a fast clip is a tremendous plus when bidding on new contracts that might otherwise bog you down.