It is still amazing that most business owners do not know about factoring. With all the financing available the idea of factoring invoices for operational cash flow is still not widely considered. The concept is very simple to understand, easy to set up, flexible to use, and very important to the businesses that stumble onto it.
There are so many types of financing available; bank term loans, lines of credit, asset based loans, mezzanine financing, private placements, revolvers, loans with warrants, direct public offerings, 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.
We’ve said it here previously; factoring is a financing tool that is perfect only for certain situations. If you have sales or contracts with term payment conditions that are starting to eat up your access to in house capital, that’s a good time to call a factoring company.