To ensure a healthy growth of your business and the bright future of your firm one of your most important tasks is the one of providing current and steady cash flow. Nowadays for several known reasons and in addition because of general liquidity crisis even most reliable customers tend to extend the most accommodating terms of payment, causing cash shortages also in relatively sound and stable businesses. In spite of increased sales less and less money is coming in, always late, thus hard expected and needed. It is true, there is no completed sale before the money is in the pocket. In times we are going through, the lack of financial discipline could easily endanger the strongest business, for not only the real value of money is wasted; current struggles to make ends meet can brings the company on its knees. Paying bills on daily or weekly basis can simply turn into the mission impossible if the money is too tight because of the outstanding invoices.
Getting a bridging bank loan that banks are lending for short time can prove to be too complicated, requiring a lot of paperwork and a slow turn-around time. The decision of the bank will be based on your creditworthiness. For several reasons it could easily happen that you are not able to qualify for a classical bank loan. In cases like these you should explore other options. One is quite different method of providing funds based on the money that is sure to be coming in. It is called factoring receivable and can be a sound solution when you are looking to resolve the always present need for fast money. Factoring receivable means literally selling issued invoices to financial institution which collects the payment for your benefit. What you get is the face value of your account receivables, minus discount charged for advantages of instantaneous cash.
Can you imagine your open invoice settled in within even twenty-four hours after being issued? In general you get eighty percents of the amount immediately; left-over called »reserve« is paid to you once the amount due on account receivable is collected. It comes reduced for fee as settled in process of negotiation. When deciding for or against factoring receivable every business must thoroughly considerate the costs of factor against the inconveniences related with cash flow deficiency. And estimate the price of missed sales opportunities. It is recommended to calculate the costs of the funds paid to factor per month and compare it with possibility of having the cash in hands to produce higher percentage return. After all, what a return can a business generate when having an order but is not able to fill it because of the lack of supplies, working power, materials etc.? Taking advantages of early payments to your suppliers and the use of volume discounts makes you more competitive and puts you in the better position on the market, making you more enterprising and successful than others. And instead of early payment discount you can offer more popular and required extended paying terms.
Yes, the factoring receivable might a be wise alternative, offering you to fully manage your sales ledgers. Factoring receivables firm is directly interested in following up on your invoice to excite payments in timely fashion, saving you headaches on account of confrontations with your customers. Search thoroughly, ask advice and take your time to find a reliable partner for factoring receivable; the one that value professionalism and follows only what is best for you without compromising your best interests just to do a deal.
To ensure a healthy growth of your business and the bright future of your firm one of your most important tasks is the one of providing current and steady cash flow. Nowadays for several known reasons and in addition because of general liquidity crisis even most reliable customers tend to extend the most accommodating terms of payment, causing cash shortages also in relatively sound and stable businesses. In spite of increased sales less and less money is coming in, always late, thus hard expected and needed. It is true, there is no completed sale before the money is in the pocket. In times we are going through, the lack of financial discipline could easily endanger the strongest business, for not only the real value of money is wasted; current struggles to make ends meet can brings the company on its knees. Paying bills on daily or weekly basis can simply turn into the mission impossible if the money is too tight because of the outstanding invoices.
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