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Business
Financing
One
of the toughest hurdles that most start up companies face
is financing. Sometimes, because the company is new, it has
trouble getting its hands on bank financing and operating
funds. One of the better kept secrets for a source of financing
for small, new companies is factoring. Factoring is when a
company sells its receivables to accumulate instant cash flow.
If we use a manufacturing company as an example, we can demonstrate
factoring by saying that once this manufacturing delivers
its goods to say Wal-Mart, the company is then, depending
on the terms of the delivery, forced to wait 30, 60 or sometimes
even 90 days to collect payment.
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By factoring, this manufacturing
company can collect payment on delivery to provide cash flow
to help fulfil future orders within the 30, 60 or 90 days.
Factoring can be a very expensive source of financing and
is only recommended to companies who are growing faster than
their current financing needs. Because factoring is rather
expensive form of fiancing, many companies like to use it
only as a last resort. Factoring allows a company in financial
difficulty to focus attention on the operations of their business
as oppose to how they are going to make payroll. So depending
on the state of the firm, factoring can be a useful financial
tool for finacing; one that business owners should explore.
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See:
• Business
Factoring
• Credit
Score
• Credit
History
• Debt consolidation
• Online
loan applications.
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This article is licensed under the GNU
Free Documentation License.
It uses material from the Wikipedia
article "Business Financing".
Also see:
• Having
Trouble Getting a Loan? Ten Common Credit Mistakes
• No Credit? You Will Need a Bad Credit Loan
• A Personal Loan And Your Rights |
