Cash Flow Notes | Factoring

The cash flow notes business is as lucrative as it is wide. By wide mean there are various note instruments for investors to purchase and add to their portfolio and cash streams. One area that has not yet been discussed on this blog is factoring.

Cash is the go juice that makes businesses run! Without a steady cash flow stream, payroll would go unpaid, vendors would be pounding the door down trying to collect, utilities and leasing companies would be shutting off basic services and locking the doors...the business would no longer be a business if the flow of cash ceases. Fortunately, there are options available to business to keep the flow of cash maintained and flowing.

Loans are an option but loans require repayment but are a viable option. Many companies have a source of funding to improve cash flow without getting a loan. This is called factoring. Factoring allows you to sell your accounts receivable to a finance company that specializes in factoring.

Factoring allows a company to sell part or all of it's account receivables to the factoring company. In return the for the accounts receivable, the company receives lump sum cash which can be used to expand, buy new equipment, hire new employees for servicing new clients or projects....the list goes on.

Retail business are not usually prospects for factoring, however businesses that sell to other businesses are candidates for factoring since payments for their services often extend from 30 days and in some cases up to 120 days before receiving payment. For projects that required a large outlay of cash for completion, 90 to 129 days is a long time to wait for payment and this is where factoring is a viable option for business to business companies.

Factoring companies will take over the accounts receivable after checking the credit worthiness of the customers and cut a check to the business. The business is now free to grow, expand or meet payroll, whatever the need may be now that cash flow has been restored.

Factoring is just another part of the lucrative cash flow and cash flow notes business.

1 comment:

factoring said...

Factoring is not just a cash management tool for manufacturers since almost any type of commercial business can benefit from factoring.