Factoring Services

Factoring services means managing the financial operations of an organization to achieve the objective of the enterprise. The basic financial operations are investment, which deals with acquisition of fixed assets; financing, which deals with the raising of required funds from various sources; and profit appropriation, which deals with appropriating the profit earned by the enterprise among the suppliers of funds.

Regarding investment, assets/projects are to be selected only by considering their net returns. Regarding financing it is to be ensured that the firm gets the required finance at the lowest possible cost. Similarly, regarding profit appropriation it is to be seen that sufficient fund is provided for the developmental activities of the enterprise without impairing the interest of the suppliers. In a firm where these operations are planned and controlled properly it can be said that there exists efficient factoring services.

All the operations and resources in a business organization are managed with the same broad objective, i.e., to attain the objective of the enterprise. So each resource or area should be managed in such a way to contribute to the fulfillment of the objective for each functional area. According to the objective of profit maximization the ultimate goal of a business enterprise is to maximize its profits. All the efforts of the organization are to be directed to achieve this goal.

Business is for earning profit. When profit earning is the aim of the business, profit maximization should be the obvious objective. Profitability is an indicator to the efficiency with which the firm is managed. The higher the profit, the better the efficiency. For growth and expansion, profit is the main source of finance. To meet unforeseen contingencies reserves are necessary which is possible only if there is enough profit. However the term profit is vague. It may assume different meanings in different contexts. It may be short-term vs. long-term, or profit to the equity shareholders vs. total profit. It may be profit before tax or profit after tax. It may be absolute profit or profit in relation to investment.

Factoring provides detailed information on factoring, credit card factoring, loan factoring, invoice factoring and more. Factoring is affliated with Invoice Factoring Discounting

Credit Card Factoring

Credit policy refers to the combination of decisions pertaining to variables such as credit standards, credit terms and collection. Credit standards constitute the various criteria on the basis of which the customers, to whom credit is to be granted, are evaluated by the firm. Credit terms contain the terms and conditions of extending the credit facility. They include, duration of credit, terms of payment, delivery schedule, discounts etc. Collection efforts comprise the steps taken by the firm in order to collect the book debts from the customers.

There are different types of credit policies being followed by factoring companies. A firm may either follow a tight credit policy or a liberal credit policy. A firm is said to be following a tight credit policy where it sells on credit on a highly selective basis only to those customers with proven credit-worthiness and are financially strong. A firm following a liberal credit policy sells on credit to customers on liberal terms and standards. Credit is granted even for longer periods to those customers whose credit-worthiness and financial soundness are well known.

A tight credit policy means rejection or refusal of certain types of accounts whose credit-worthiness is doubtful. This results in loss of sales and consequently loss of revenues. When the firm loosens its credit policy, two types of administration costs are incurred viz., the cost of credit investigation and supervision and the collection costs. An immediate consequence of liberal credit policy is the accumulation of bad debts, where the firm is unable to collect the debts. This happens because the firm tends to sell even to such customers with relatively less credit standing. In modern days, the credit policy is used as an effective marketing tool capable of boosting the sales volume of the firm. This may be used to maintain the market share, especially in a declining market. Credit policy helps to retain old customers and create new customers by luring them away from competitors.

Factoring provides detailed information on factoring, credit card factoring, loan factoring, invoice factoring and more. Factoring is affliated with Invoice Factoring Discounting

Growing Faster Than Your Cash Flow? Let Factoring Fund Your Next Expansion!

Why wait weeks or months to get paid by your clients when you can access your money in a matter of days by factoring your invoices. When a business factors their invoices, they are allowing a third party to purchase their invoices at a discount price. This discount is considered the third partys fee.

If your business receives orders from customers on a regular basis, but has to wait 30, 60, or even 90 days for payment, you maybe experiencing a crunch in your cash flow. Factoring gives you the opportunity to access your cash within days not weeks or months. The growth of your company depends on whether or not you have the working capital necessary to finance your expansion.

When a factor purchases a companys invoice or invoices, no interest is ever charged. This is because factoring is considered an outright purchase. When a company sells their invoices to a factor, they can expect to receive an advance up to 90% or more of their accounts receivable. The business gets this money immediately and the factor makes a fee for this service, turning the transaction into a win-win situation for both parties.

Factoring is no longer a business tool used by the large Fortune 500 Companies. Small to midsize businesses are receiving tremendous benefits by implementing factoring as part of their financial strategies. If your business is growing at a faster rate than your cash flow, maybe its time to explore an alternative solution such as accounts receivable funding.

Marty Milan works with businesses to help them generate a continuous stream of cash flow without the occurrence of debt. In addition to accounts receivable funding, you can read on various topics such as lawsuit funding, structured settlements, selling your private mortgage notes and more at: www.cashflowaccess.com. Email at cashflowaccess@aol.com.

Other articles include: To Factor or Not to Factor?

Use Invoice Factoring to Succeed

Factoring is an accounts receivable financing strategy for businesses to sell accounts receivable at a discount to get cash needed for business growth and development. By factoring the value of the accounts receivable, the business is able to increase the speed of cash flow.

The business can use a factoring company to obtain cash equal to the value of the accounts receivable minus a factor's fee. This process can also be referred to as invoice factoring.

When factoring an invoice, three parties are affected by the process, the seller who owns the invoice, the debtor who owes the balance on the invoice and the factor or factoring company who will buy the invoice.

There are several types of factoring.

Full service factoring involves notifying the debtors who owe the balance. The factoring company controls the credit as they collect the outstanding debts.

Invoice finance allows the seller to keep the credit control function so the factoring company is undisclosed to the debtor.

Recourse factoring is the most common type of factoring. In this case the seller continues to be at risk as the seller must buy back the invoice if the debtor does not pay within a specified time frame. This is the lowest cost option for the seller because of the risk involved.

Non recourse factoring puts the risk of non-payment completely on the factor who purchases the invoice. If the debtor fails to pay, the factor cannot attempt to receive payment from the seller. As a result the factor will often turn away customers with only average quality of credit. The cost of this type factoring is higher since all the risk is on the factor.

New company factoring.

Factoring is ideal for a new company to get financing since often when new, banks are more resistant to making loans to a company. By selling accounts to a factor (or finance company) the company can gain immediate cash based on what its customers owe. In this case the company would send the bills to the factoring company for payment rather than to the customers themselves, eliminating the wait for the billing cycle to complete.

Caution regarding factoring.

Factoring is an expensive source of funds and is only recommended when a company is growing faster than their current funds can handle. It should be used more as a last resort than as a first solution. Factoring can be a huge benefit during rapid growth or difficulty so focus can be on solutions and processes rather than on concerns for keeping bills and payroll paid in a timely manner.

To offset the cost of factoring, have customers pay higher percentage points to receive flexible terms. Give a large cash discount to customers or clients who make cash payments at the time of purchase. This way covering the cost of factoring can be turned into a benefit for both the customer and the supplying company.

Janie Jenkins is the "Easy To Do" instruction expert. Discover how easy it is to do what seemed like your most complicated ambition.More About Factoring

What is Freight Bill Factoring?

Trucking company owners know that cash is king and prompt paying clients are critical to the company’s success. But, what can you do if you get a good client that insists on paying their invoice in 30 days or more? How do you pay fuel, drivers and repairs while you wait to get paid?

In the past, the only option you had was to take the client and grit your teeth.

However, there is an option that has been gaining popularity with the trucking community. It’s called freight bill factoring. Freight factoring eliminates the payment wait and gets your freight bills paid in a couple of days. But, transportation factoring is very different than a business loan. It works by selling your freight bills to a freight factoring company, who pays you for them and then waits to get paid by your customers/freight brokers.

Transportation factoring can be easy to use and works as follows:

1. You deliver the load and issue a freight bill
2. You sell the freight bill to the factoring company, who pays you a first installment of 90% to 97% of the freight bill
3. You get immediate money while the factoring company waits
4. Once the factoring company gets paid, any remaining reserves (less a small fee) are returned as your second installment

Freight factoring rates vary, but they go from 1.5% to 3% per 30 days depending on volume, duration of transactions and customer selection. A factoring line can be established in a little as 3 days, provided you have all your company documentation in order.

About Commercial Capital LLC
Looking for freight bill factoring. Commercial Capital provides freight factoring and transportation factoring to truckers. For a free consultation, call Marco Terry at (866) 730 1922

Invoice Factoring Basics

 

Can’t afford to wait 30 to 60 days to get paid by your clients? If you are like most business owners, waiting to be paid can be very challenging. In some cases it can mean lost opportunities. It can mean that you don’t bid for big sales because you know you won’t be able to play the waiting game. At its worst, it can spell disaster. It can mean that you need to delay payroll. It may mean that you don’t pay rent or taxes. It may force you to shut down your business.

If you are like most business owners, your first reaction will be to call your banker. Unfortunately, banks will not lend money to businesses that are new, have no hard assets or don’t have three years worth of profitable financial statements. At this point, most business owners give up, thinking that they don’t have any other options. However, they do.

If your company sells products or services to large credit worthy companies, you could qualify for invoice factoring financing. Invoice factoring reduces the time it takes for you to get your money to one day. How quickly could you grow your business if your invoices were paid in 24 hours?

As opposed to bank loans, factoring companies do not require hard collateral. The only requirement is that you have invoices form credit worthy clients. Factoring companies work differently than banks. A factoring company will provide you with financing based specifically on your invoices. This means that if your invoicing grows, your financing also grows.

Factoring is very simple:

1. You generate invoices for your products or services

2. You submit the invoices to your clients and to the factoring company

3. The factoring company advances you up to 85% of the gross value of your invoices (the remaining is kept as a reserve to offset disputes)

4. Once the invoice is paid by your client, the factoring company releases the 15% reserve and charges their fee

Factoring financing is easy to qualify for and can virtually eliminate the 30 to 60 days it takes for your customers to pay. It provides you with the necessary working capital to grow your company and take new opportunities.

Need to receivables factoring? We can provide you with a factoring, invoice factoring or accounts receivable factoring quote for free. Marco Terry, the president, can be reached at (866) 730 1922