Invoice Factoring Explained, Officinado Business Help Directory
Invoice Factoring Explained
Cash flow is a business's biggest need, and when it fails to flow your business goes under, there is a simple way to turn outstanding invoices into cash.When any economy shows signs of recession, one of the first things to slow down is a business's cash flow.
Businesses that are not prepared to creatively raise additional working capital may be in for a rough ride when their receivables begin to trickle in.
Credit at most commercial banks is being tightened almost to point of extinction, which leaves many struggling businesses with few available alternatives for improving their financial standing.
Cash flow is a business's biggest need, and when it fails to flow, there is a simple and time proven method to liquidate receivables into ready cash.
Factoring has been in use for hundreds of years.
Why would a business need to factor its invoices? If you're providing products or services to other businesses more often than not, you're financing their purchases. Typical terms range anywhere from 28 to 60 days. However, we all know that most businesses fail to pay on time
What basic qualifications does a business need to have in order to be a candidate for factoring?
They must be selling to other creditworthy businesses.
The product or service must have been delivered and accepted.
The factor must be able to obtain a priority collateral position on the receivables.
The customer may not have any rights to return or offset payment on the product or service.
So factoring generally only available on business-to-business transactions, and obviously there are costs involved typically the factoring company will take 10 – 20% of the invoice value.
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Cash Resources Australia have been offering Confidential Invoice Discounting to small & medium businesses since the mid- 80’s. Cash Resources Australia are an independent Australian owned non-bank organisation who offer professional advice designed to help you grow your business