Many businesses, from all sorts of industries, currently use factoring as a method to improve their bottom line. It allows the business to attract larger more lucrative contract opportunities knowing that the financial burden will be minimalized due to financing the accounts.
Here are a few examples of who might use accounts receivable factoring;
• A security company who provides guards on facilities. They build the company using labor which has to be paid on a regular basis. Payroll often comes faster than payments made by the customer especially if the company is growing fast and is bringing on new accounts and hiring more staff.
• A temporary staffing company that also has payroll constraints due to increased contracts due to their early success. Factoring will allow the company to market to larger accounts knowing every time they submit time sheets for the employees they will get a fresh wire transfer into their bank account to keep the engine humming.
• A manufacturing company can definitely use accounts receivable factoring in order to keep the warehouse stocked with raw materials. As each order is shipped the invoice that is sent to the customer is factored allowing new purchase orders to suppliers to refill the parts needed to produce their product.
• A consulting firm that is working on complex projects and doesn’t have time to scramble for funds to keep all the balls in motion to keep the customer happy. Using factoring alleviates the need worry about how the everyday bills will be paid allowing the business to focus solely on the work and performance.
These sorts of scenarios are excellent fits for ongoing working capital factoring. It allows situations where keeping current with payroll, ordering supplies and paying taxes often can trip up a company in a steep growth spurt.