Because income is the life-blood of your company, your ability to maintain a healthy cash flow can mean the difference between success and failure.

In a perfect world, you provide the product or perform the service you are hired to do and get paid immediately. Since we do not live in a perfect world, we often get compensated for our services when clients decide to pay, at a time convenient to them, anywhere from 30, 60, 90, or more days later. Where does that leave you, the business owner, who has the responsibility of meeting payroll, mortgage, supplies, and other overhead expenses on time? Most likely, you do not have the luxury of paying when you choose; you are expected to pay now, not tomorrow.

Also, when you need money to finance a purchase (e.g., a new piece of equipment, a new or additional business location, leasehold improvements, adding inventory to meet immediate or cyclical demands, etc.), you have to borrow money or deplete cash reserves.

What are your options? You can fall back on your company’s credit line, depending on your financial position. Or, you can go to the bank or other finance company for a loan or lease, where you may or may not be approved. But, why add debt and interest that takes away from your profit and your bottom line?

What is Factoring?

There is another option many business owners don’t know about or do not fully understand, even though this crucial financial asset has been around for over one hundred years. It is called “Accounts Receivable Financing” or “Factoring”. In simple terms, “factoring” is selling your accounts receivables to a funding source for an immediate lump sum of cash. Instead of waiting for 30, 60, 90, or more days for your customers to pay, you get paid in 24 to 48 hours. The Factor will either buy the invoice directly or lend money against it. The good news is that this option results in rapid profitability.  Where lending institutions base decisions on the borrower’s credit worthiness, a “factor” (the entity that provides accounts receivable financing) instead looks at the borrower’s customers’ (the clients that owe you money) credit worthiness. This concept is applicable to all industries, for example, healthcare, construction, technology, and any other companies that carry accounts receivables.

What will it cost me to factor my accounts receivables invoices?

You may have dismissed using factoring because of the high costs of another company taking over your accounts receivable or the fear of injuring your relationships with your clients. The cost, however, is often less than if you offered a discount to your customers for paying on time or in advance. The factor will give you a firm quote on discount rates prior to committing to a factoring relationship.
How soon can I get my money?

The application process takes usually five to ten business days after the factoring company gets all the necessary information from your company. From that point forward, the factor will be able to fund the verified invoices generally within one to two business days.

What are the benefits from factoring?

Factoring accelerates cash flow, gets quick results, does not add debt, relies on the strength of your business’s customer, not you, is often available when bank financing is not, and offers a dependable continuing source of cash, as often as every week, without the need for separate loan applications

Factoring can be more appropriate than bank financing because traditional financing delays and negotiations are eliminated, allowing business owners time to do what they do best – the business of their business.

So, if you want or need immediate access to cash and no longer want to worry about liquidity issues, collection hassles, or your business' financial strength, the lump sum of cash available through factoring can provide you with financial stability, flexibility, and purchasing power. What’s more exciting is that factoring need not be a one-time process to collect on past-due receivables; you can submit your accounts receivables every week and allow the factoring company to do the collecting for you. You realize cash flow on a weekly basis, every week.

Before you jump into bed with any factoring company, be cautious as to how much of a percentage they subtract from your accounts receivable totals to provide their services and how gently they handle your client base relationships. Through extensive research, I found a very reliable source to get more information on finding and tailoring the right factoring company for your unique business. What makes this source really exciting is that the factoring company fees are well below what you usually find in the marketplace. For a free, no obligation consultation on how factoring might work for your business, please contact Mr. Michael Coultrap, DCFS, CAP SOL, Inc. at 719-532-0363, e-mail him at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it , or visit his web site at http://www.capsolconsulting.com/. Please tell him that you heard about him through the Tracker Tips e-Newsletter.Because income is the life-blood of your company, your ability to maintain a healthy cash flow can mean the difference between success and failure.