By selling invoices a company can receive payment
in an extremely short span of
time.
Convenience. This eliminates the processing
and personnel necessary to collect incoming
payments.
Immediate source of funds. If a
company encounters a cash flow shortage that needs
immediate attention then factoring receivables is a
quick way to obtain revenues.
Value. One of the most basic economic
principles states that money received today is worth
more than money received in the
future.
Discounts. It will become
possible for a company to pay their vendors
on a more timely basis. This typically results
in qualifying for discounted pricing on
supplies.
No more COD. Factoring receivables would remove
the need for a business to require COD
terms for their customers. This could provide the
competitive advantage necessary to obtain additional
business.
In certain industries it is very important for a
business to carry the option of credit financing. To
neglect this option could be detrimental to long
term growth. However, allowing customers the use
of credit brings about a unique set of
risks and challenges. Factoring receivables is an excellent
method to offset many of these
negatives.
Disclaimer: The information
provided in this site is not legal advice, but general
information on financial issues commonly encountered. We
shall not be liable for any errors in the content or for
any actions taken in reliance thereon. Please consult
your financial
advisor.
