There is a particular form of commercial finance called factoring. When the commercial finance company makes an advance on accounts receivable, this type of financing is known as invoice factoring. This financing tool is very easy to set up. A company only needs to have invoices for completed work. The initial account set up with the factoring company takes a week to ten days. Once the factoring company is ready to fund on the invoices, the funds can be available within 24 hrs of finishing the job. For the most part there is no top end credit limit, so growing the company can be managed through the funding process. The company does not need to re-qualify for any increases in funding availability.
The biggest challenge for the factoring industry has been, business owners seldom even know this type of financing is available. Many businesses have never even heard of factoring and know nothing about it. Using accounts receivable to provide working capital for the company operations is a useful tool. It’s easy to obtain and flexible to use. Given the right set of circumstances, it may be the best financing resource.
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