Factoring Financing For Security and Private Investigation Firms

December 23, 2011 By

Most security firms and private investigators have to give up to 60 day payment terms to their commercial and insurance customers. This can create a real hardship for small firms that have immediate expenses and can’t afford to wait up to 60 days to get paid. But you still have to offer terms regardless – because if you don’t – your competitors will. One way to solve this financial problem is to use a tool called invoice factoring.

Factoring can accelerate your funds from from slow paying customers. However, your customers don’t have to pay your security agency or private investigation firm any sooner. Rather, a factoring financing company advances your company money, based on the value of your open invoices. The advance ranges from 80% to 90% of the gross value of your invoices to credit worthy commercial customers. Your company gets the remaining 10% to 20% (less fees) once your customer pays in full.

The big difference between factoring and other forms of business financing is that the main collateral for the transaction is the credit worthiness of your customers. This allows you to leverage their creditworthiness and use it to your advantage, enabling to finance operations.  Also, factoring is easier to obtain than other forms of business financing. The main requirements to qualify are:

  1. Your invoices need to be for completed work
  2. Your invoices need to be free of liens
  3. Your customers must have good commercial credit
  4. Your company must be free of legal and tax problems

Factoring financing is an ideal solution for growing security firms and private investigation agencies that have good opportunities but can’t afford to wait up to 60 days to get paid by customers.

Filed Under: Security Agencies

Factoring Financing For Utility Construction Companies

December 23, 2011 By

Most utility companies have to give their customers up to 60 days to pay an invoice. Although providing payment terms to customers can certainly help your company win new business, it can also wreak havoc with your cash flow. This is because your company needs to cover all operating expenses until the invoice is paid. And in today’s environment, few companies have the required cash reserves to meet that challenge. One way to handle this problem is to use business financing to cover your expenses until customers pay. One solution that has been gaining traction in recent years for its ability to solve this problem is invoice factoring.

Invoice factoring accelerates your revenues due from utility customers or their GC’s. It provides the money your company needs to pay expenses while waiting to get paid by your customers. It works by using a factoring financing company that advances you up to 80% of your open invoices, holding them as collateral. The transaction closes once your customers pay the invoices in full, at which time you get the remaining 20%, less any financing fees.

One advantage of invoice factoring over other types of business financing is that it can grow with your business. Factoring does not have a hard limit, rather the funding limit is based on the volume and quality of your invoices. This means that the line can grow with your revenues, provided your customers have good commercial credit.

Qualifying for invoice factoring is also relatively easy. To qualify, your utility construction company must meet this criteria:

  • Bill for completed work (or bill by the foot)
  • Have customers with good commercial credit
  • Have no liens that encumber invoices
  • Have no tax or legal problems

Invoice factoring is an ideal solution for small and growing utility companies that have cash flow problems because they can’t afford to wait up to 60 days to get paid by customers.

Filed Under: Construction

Factoring For Legal Services Staffing Companies

December 23, 2011 By

Most legal services staffing agencies have a common problem. Their commercial customers and law office clients usually ask for payment terms – demanding up to 60 days to pay their invoices. On the other hand, employees need to be paid on a weekly or biweekly basis. This can create a problem for legal services staffing agencies that don’t have a cash reserve that can be used to temporarily pay expenses. One way to solve this problem is to accelerate revenues using invoice factoring.

Factoring solves this problem by providing your staffing agency with the money it needs to meet expenses, while it waits to get paid by commercial customers and law offices. The transaction is structured so that the factoring financing company advances funds to your company – usually up to 90% of the outstanding invoice value. The advance uses your invoices as collateral and gives your company the liquidity it needs to meet it’s current expenses and to take on new clients. Your company gets the remaining 10%, less any fees, once your customer pays in full.

One of the advantages of factoring over other forms of business financing is that  it’s very flexible and can grow with your business.  The factoring financing line can grow alongside your revenues, provided your customers have good credit.  This makes it an great solution for growing legal staffing agencies.

Qualifying for invoice factoring is fairly easy. The legal services staffing company must meet the following criteria:

  • Must have commercial customers / law offices that have good commercial credit
  • Invoices must be for completed and billable work
  • The company must be free of legal and tax problems
  • The invoices need to be free of liens
Filed Under: Staffing Agencies

Factoring Financing For Freight and Trucking Companies

December 22, 2011 By

Most freight and trucking companies place constant money demands on their owners – there are drivers, fuel, repairs and other expenses that must be paid regularly. However, shippers usually pay their invoices in 30 days, and sometimes in 60 days. Unless the freight company has money held in reserve, it runs the risk of running into cash flow problems. One way to solve this problem – before it starts – is to accelerate revenues with freight factoring.

Freight factoring enables you to get something similar to a quick pay, but without having your shipper pay any sooner. Rather, a factoring financing company advances funds to your trucking company based on your open invoices. You will usually get an advance of about 90% of the gross value. This provides the funds you need to operate your business. The remaining 10%, less any fees, are given to your company once your shippers pay their invoices in full.

Invoice factoring has a number of advantages over other types of business financing. It’s a flexible form of funding that grows with your transportation company. Most invoice factoring lines will increase in conjunction with your sales, provided your shippers have good commercial credit. Also, most factoring lines are relatively easy to obtain. To qualify, the company must meet this criteria:

  • The invoices must be from shippers with good credit
  • The invoices must be free of liens
  • The company must be free of legal and tax problems

Invoice factoring is an ideal solution for growing freight and trucking companies that have slow paying customers but also have great potential.

Filed Under: Transportation

Factoring Financing For Commercial Landscaping Companies

December 22, 2011 By

One of the biggest challenges for a commercial landscaping company is dealing with slow paying customers. It’s common for commercial customers to request anywhere between 30 days to 60 days to pay an invoice. In the meantime, the commercial landscaping company is responsible for covering all the expenses of doing the work and waiting until payment. For many companies, waiting that long can be a problem since they have a number of current expenses that must be met,  such as payroll, supplies, equipment and others. One way to solve this problem is to accelerate your revenues using invoice factoring.

Factoring unlocks the money that is due to your company but is tied in slow paying invoices. It provides you with the funds you need to meet your current expenses and provides stability to your cash flow. It works by partnering with a factoring financing company that advances funds using your open invoices as collateral. Most factoring companies will initially advance about 80% of your outstanding invoices. Your company gets the remaining 20%, less any fees, once the end customers actually pays the invoices in full.

Factoring plans are more flexible than other forms of business financing. One of its advantages is that it lets you leverage the credit of your customers – since the factoring company uses their payment ability as its main collateral. Also, factoring plans don’t have limits like conventional loans. They can grow with your sales, as long as you are selling landscaping services to customers with solid credit. This makes invoice factoring an ideal solution for small and growing commercial landscaping companies.

Filed Under: Landscaping

Factoring Financing For Freight Forwarders

December 21, 2011 By

Aside from finding quality shippers, one of the most important tasks at a freight forwarding company is managing cash flow. This can be very difficult because the freight forwarder needs to manage competing interests.  Shippers, for example, want you to give them comfortable payment terms – usually up to 60 days after shipment. Carriers on the other hand want you to give them quick pays. Unless your company has a cash reserve, quick expenses and slow revenues can be a recipe for problems. One way to solve this problem is to accelerate your revenues using freight factoring.

Although factoring provides for accelerated revenues, your customers don’t have to pay sooner. Rather, a factoring financing company advances funds using your invoices as collateral. Most factoring companies can advance up to 90% of the amount outstanding for your eligible receivables. Your company gets the remaining 10%, less a fee, once the invoice is paid in full.

One advantage of invoice factoring is that it’s easier to obtain than conventional financing. To qualify, your freight forwarding company must meet this criteria:

  • Your shippers must have good commercial credit
  • Your invoices must be free of liens
  • Your company must be free of legal and tax problems

One of the benefits of  freight factoring is that your financing line is flexible and can grow with your freight forwarding company.  Most factoring companies will be able to increase your line as your sales increase, provided your shippers have good credit. This makes freight factoring an ideal solution for growing freight forwarders.

Filed Under: Transportation

Factoring Financing For Government Contractors

December 21, 2011 By

Providing goods and services for the government – whether federal, state or city – can be very profitable and lucrative work. However, one common challenge that many government contractors face is slow payments. This can create problems because government contractors usually have to spend their own funds to get the work done or product delivered and few can afford to wait 60 days to recover their investment.  This can create a cash flow problem and jeopardize the contractor’s ability to meet current expenses or pursue new opportunities. There is one way to solve this problem that has been gaining traction recently, it’s called invoice factoring.

Invoice factoring accelerates your revenues, providing stable cash flow and minimizing the problems created by slow paying government customers. However, your customers don’t need to pay sooner. Rather, a factoring financing company advances up to 85% of the value of your outstanding invoices, holding them as collateral. You get the benefit of an accelerated payment, while the factoring company holds the invoice until payment. Once the invoices are paid, you get the remaining 15%, less any fees.

Factoring has some advantages over other types of business financing. It’s more flexible and can grow with your business because the size of your funding line is determined by the size of your government sales. Also, it’s easier to obtain than other form of business financing. The following criteria must be met to qualify:

  • Your invoices need to be from credit worthy customers (most governments are)
  • Your invoices need to be free of encumbrances (liens)
  • Your invoices must be for completed work
  • Your company must be free of legal and tax problems

Factoring is an ideal source of funding for government contractors that have solid opportunities but are also facing cash flow problems due to slow payments.

Filed Under: Government Suppliers

Factoring Financing For Hydraulic Equipment Repair Companies

December 21, 2011 By

Most hydraulic equipment (e.g. valves, pumps, etc.) repair companies that work with commercial or governmental customers have a common challenge. They have to wait up to 60 days after finishing the work before they get paid by their customers. This can create a problem for companies that don’t have cash reserves and can’t afford to wait that long to get paid. One way to solve this problem is to use a business funding tool known as factoring financing.

Factoring financing accelerates the funds that are due to your company but tied in slow paying invoices. Your company partners with a financial intermediary called a factoring company that advances up to 80% of the value of your eligible invoices from credit worthy customers. This advance provides the funds you need to cover your business expenses. You get the remaining 20%, less the funding fee, once your customer pays the invoice in full. Many hydraulic equipment repair companies that use invoice factoring use it to finance part of their receivables, ensuring they have access to funds at all times.

Most factoring lines don’t have hard limits like other business funding solutions. Rather, your limits are based on the quality of your customers and the volume of invoices you finance. Factoring lines can dynamically accommodate business growth, provided your invoices are to high quality customers.

Qualifying for invoice factoring is relatively easy. To qualify, most companies need to meet the following criteria:

  1. Invoices need to be free of liens
  2. Company needs to be free of legal and tax problems
  3. Invoices need to be for completed work
  4. Customers need to have good commercial credit

Invoice factoring is an ideal business financing solution for growing hydraulic repair companies that have cash flow problems but also have growth opportunities.

Filed Under: Business Services

Factoring Financing For Janitorial Services Companies

December 21, 2011 By

Most janitorial companies that focus on commercial cleaning have to extend payment terms to their customers. In other works, they have to wait up to 60 days to get paid for their work. Not many commercial janitorial companies can afford to wait that long to get paid. They have important expenses such as payroll, supplies and equipment. Unless your company has a cash reserve, slow payments can ultimately lead to cash flow problems. One way to solve this problem is to accelerate your company revenues using factoring.

Factoring accelerates your revenues by using a financial intermediary. Your customers still pay on their usual terms, but the factoring company advances you up to 80% of your outstanding invoices to credit worthy customers. This provides the money you need to operate your business while minimizing the worry about customer payments. The invoice factoring transaction closes once your customers pay the invoices in full. Many companies use invoice factoring as a tool to keep funds flowing and to ensure there is always money to pay company expenses.

Factoring is a very flexible form of financing. As opposed to other business financing solutions, factoring lines don’t usually have hard limits. Rather, the limit is based on the quality and volume of invoices that your business has. This means that the line can easily increase to accommodate sales growth, provided your sales are to credit worthy customers. Also, factoring is relatively easy to qualify for. The basic requirements are:

  1. Your invoices need to be from credit worthy customers
  2. Your invoices need to be free of liens
  3. Your invoices need to be for completed work
  4. Your commercial cleaning company needs to be free of legal and tax problems

Factoring is an ideal business financing solution for janitorial services companies that have growth opportunities but are facing cash flow problems caused by slow paying customers.

Filed Under: Business Services

Factoring Financing For Cable Contractors and Installers

December 21, 2011 By

Most cable companies are great customers. They have solid credit ratings and pay their invoices regularly. However, they also tend to ask for extended payment terms, usually 30 to 60 days. Because of this, even though the works is completed, the cable installer and contractor will not get paid for their work for up to 60 days.  This can create a cash flow problem for companies that don’t have a cash reserve, and usually affects small and growing cable installation companies. One way to address this problem is to accelerate your revenues using invoice factoring.

Invoice factoring is a business financing tool that accelerates the money that is tied on slow paying invoices. Your cable company customers don’t have to pay sooner though. Rather, a factoring financing company acts as an intermediary and advances up to 80% of the value of your outstanding invoices. This provides your cable installation and repair company with the funds you need to cover expenses, buy supplies and focus on new opportunities. The factoring financing transaction closes once your customers pay in full.

Factoring is easier to qualify for than other types of business financing. This is because the factoring company does not look for hard assets to use as collateral – rather – they consider your invoices from credit worthy companies to be the best collateral there is. And, they are happy to fund these. To qualify for this type of business financing, your cable installation company must meet this criteria:

  1. Your invoices must be from credit worthy companies. Most cable providers are.
  2. Your invoices need to be for completed work
  3. Your invoices need to be clear of any liens
  4. Your company must be free of legal and tax problems

Another advantage of factoring is that it is tied directly to your sales. This means that your funding line can grow alongside your sales, provided you are selling to reputable cable companies. This makes factoring an ideal solution for small and growing cable installation and repair companies.

Filed Under: Cable

Factoring Financing For Technology Staffing Companies

December 20, 2011 By

Waiting up to 60 days to get paid by customers can be very challenging for technology staffing companies. This is because they need to pay the employees that did the work much sooner than that. Employees usually get paid on a weekly or bi-weekly schedule. If the technology staffing company has a cash reserve or a bank line this should not present a problem. They can use the reserves to cover expenses while they wait for payment. If the company does not have a reserve, this problem can quickly spiral out of control. It could put the company at risk of not making payroll and prevent it from growing. This problem can be solved using invoice factoring.

Factoring is a form of business financing that accelerates your revenues due from invoices. Your customers don’t have to pay any sooner though. Rather, a factoring financing company advances up to 90% of your outstanding invoices from credit worthy customers using your invoices as collateral. This provides the needed money to pay for payroll and other critical expenses. Once your customer pays in full, you get the remaining 10%, less any factoring financing fees.

One advantage of factoring is that it’s relatively easy to qualify for it. The criteria are:

  1. You need to invoice credit worthy customers
  2. You need to invoice for completed work
  3. Your invoices need to be free of liens
  4. Your company needs to be clear of tax and legal problems

The biggest benefit of factoring as opposed to other business financing solutions is that the financing line is tied to your sales. This means that the line can easily increase to match your sales, provided you are selling your technology staffing services to credit worthy companies. This makes factoring an ideal solution for growing technology staffing agencies that have big opportunities that are being challenged by cash flow problems.

Filed Under: Staffing Agencies

Factoring Financing For Software Services Companies

December 20, 2011 By

Although the software services industry is very competitive it still commands high profit margins, mostly because they provide solutions to complex problems. One common challenge in the industry is cash flow. Most commercial customers pay their invoices in 30 to 60 days after a project is completed. But the software services company has a number of expenses that need to be paid immediately – such as payroll, equipment, supplies and rent. Obviously, if it has a cash reserve it can use it to cover expenses while waiting for payment. If it doesn’t have a cash reserve, there is a risk that the problem will spiral and grow. One solution to this problem is to use a business financing tool known as factoring.

Factoring accelerates the moneys that are due from slow paying customers. It does not require that your customer pay sooner though. Rather, an a factoring company advances funds using your invoices as collateral. Once your customer pays the transaction is settled. Most factoring financing companies will advance up to 80% of your outstanding invoices providing you with needed funds to cover critical expenses. Your company receives the remaining 20%, less fees, once the end customer pays.

Qualifying for invoice factoring should be relatively easy for most software services companies. The main requirements are:

  1. Your clients need to have solid customer credit
  2. You need to invoice for completed work
  3. Your invoices must be free of liens
  4. Your company must be free of legal and tax problems

One important advantage of invoice factoring is its flexibility. Most financing lines are directly linked to your sales and can increase to accommodate growth – provided your sales are to credit worthy customers. This makes factoring an ideal solution for small and growing software services companies.

 

Filed Under: Technology

Factoring Financing For Hospitality Staffing Companies

December 20, 2011 By

Most hospitality staffing agencies have a common problem. Their customers pay their invoices in up to 60 days after the work was done. However, the agency needs to pay its employees every week or two weeks for performing that work. Unless the hospitality staffing agency has a cash reserve, this can create a serious cash flow problem since few agencies can afford to wait that long to get paid. If left unchecked, this cash flow problem could jeopardize payroll. At its worst, it could jeopardize the agency. Fortunately, this is an problem that can be solved easily using the right business financing tool. One tool that has been gaining traction in recent years is factoring.

Invoice factoring solves this problem by accelerating the cash flow that is tied in slow paying invoices. Your customers don’t pay sooner – though. Rather, an invoice factoring financing company provides you an upfront payment for your invoices and holds them as collateral. The transaction closes once your customer pays the invoice in full.

One important benefit of factoring is that it’s tied to your sales. Provided you sell services to credit worthy customers, your line can increase automatically as your sales grow. When used appropriately, a factoring line can help an agency grow because it enables it to secure new customers without the worry of waiting for payments.

Qualifying for factoring is relatively easy. Since your invoices are the collateral for the transaction, it’s important that they be payable by credit worthy commercial customers. Aside from that, your staffing company needs to be clear of liens, legal problems and tax issues. Most staffing agencies that meet this criteria should be able to secure factoring financing. This makes it a great solution for growing hospitality staffing agencies.

Filed Under: Staffing Agencies

Factoring Financing For Cellular Tower Maintenance Companies

December 20, 2011 By

Source: Wikimedia Commons

One of the advantages of owning a cellular tower maintenance company is that most carrier and operator companies have great commercial credit and pay their invoices on time. The problem though, is that they can take up to 60 days to pay an invoice. This can create a problem for cellular tower builders and maintenance companies who cannot afford to wait that long because they need funds to pay for supplies, rent, equipment and payroll.

Since most carriers and operators won’t pay faster than 60 days, you can solve this problem by using a financing company to provide funding against your slow paying invoices. This type of financing is known as factoring. In a factoring transaction, a factoring company advances funds to your company using your slow paying invoices as collateral. This provides you with the immediate liquidity you need to meet company expenses and take on new opportunities. The transaction closes and settles once your customer pays the invoice in full.

Invoice factoring has relatively easy qualification requirements. To qualify, your cellular tower maintenance company needs to:

  • Invoice customers that have good commercial credit (such as carriers/etc)
  • Have invoices that are free of liens
  • Be clear of tax and legal problems

One major benefit of factoring, especially when compared to other business financing products, is that it’s flexible enough to grow with your sales. Most factoring lines are dynamically linked to your sales and will increase correspondingly, provided that your company is selling to credit worthy companies. This makes factoring an ideal solution for small and growing cellular tower maintenance companies.

Filed Under: Cellular / Telecom

Factoring Financing For Commercial Paving Companies

December 20, 2011 By

Most commercial paving companies have to wait up to 60 days to get invoices paid by customers. However, the commercial paving company still needs to pay for the expenses associated with the current paving job – equipment, supplies, subcontractors and salaries. This can create a cash flow problem for companies that are not well capitalized or those that don’t have a cash reserve. There is a financial tool that has been gaining traction in recent years that can be used to solve, or at least minimize, this cash flow problem. The name of this tool is factoring.

Invoice factoring solves this business problem by accelerating the funds that are due to your company from slow paying customers. It doesn’t involve faster payments by your customers though – they pay on their usual schedule. Rather, an invoice factoring company advances funds to your company using the invoices as collateral. The transaction settles once your customer pays in full.

As opposed to other forms of business financing that look at hard assets for collateral – invoice factoring companies look solely at the credit quality of your invoices and therefore your customers. Additionally, they review your company to make sure that the invoices are not encumbered by any liens, tax problems or legal problems. Commercial paving companies that meet these requirements can usually get a factoring solution in place relatively easily.

Another advantage of factoring is that the line will increase as your sales to credit worthy customers increases. This makes it one of the few business financing options that is flexible enough to grow quickly alongside your sales. Because of this, invoice factoring is an ideal tool for growing commercial paving companies that have cash flow problems.

Filed Under: Construction

Factoring Financing For Delivery Service Companies

December 20, 2011 By

Most companies in the delivery industry have a number of recurring expenses such as fuel, repairs and paying drivers. Revenues, on the other hand, tend to be delayed because most corporate customers and shippers pay their invoices on 30 to 60 day terms. This can cause cash flow problems for shippers that don’t have cash reserves. One way to solve this common problem is to use invoice factoring to accelerate the revenue due from slow paying invoices.

Factoring minimizes the problems caused by slow paying customers and provides the funds you need to pay business expenses.  It works by using an intermediary factoring company that advances funds using your slow paying invoices as collateral. You get immediate funds while waiting for your customer to pay their invoices on their normal payment schedule. The transaction closes and settles once the customer pays the invoice in full.

One benefit of factoring is that it’s easier to obtain than most conventional business financing solutions. The most important qualification requirement is that the commercial credit of your customers needs to be solid since their invoices are the main collateral for the transaction. Aside from that, the company needs to be free and clear of legal and tax problems. Lastly, the invoices need to be free of liens or encumbrances.

Most factoring financing lines can be implemented relatively quickly – in a week or two. And they integrate very well into the operations of most delivery service companies. This makes factoring an ideal solution for small and growing delivery companies that are being held back by slow paying customers.

Filed Under: Transportation

Factoring Financing For Auto Glass Installers

December 20, 2011 By

Most auto glass installers are small or medium sized companies. They spend most of their day repairing auto glass and then billing insurance companies for the work. Although it’s a profitable industry, auto glass installation companies tend to have cash flow problems because most insurance companies take up to 60 days to pay a claim. In the meantime, the auto glass installer still has to pay for supplies, rent and other business expenses. Unless the company has a cash reserve that can be used to cover expenses, it’s likely to run into a serious problem. One way to solve this problem is to use invoice factoring.

Invoice factoring accelerates your cash flow by providing funds for your slow paying insurance claims. This provides your company with the funds it needs to buy inventory, pay salaries and cover other expenses. The transaction works by using a financial intermediary – a factoring company – that advances funds against your claims. The factoring financing company keeps the claims as collateral until they are paid in full by the insurance company, usually 30 to 60 days later. Once the insurance company pays, the transaction settles.

One advantage of invoice financing over other business financing solutions is that easier to obtain than other financing products. There are three main requirements that are needed to qualify for invoice factoring:

  1. Your invoices need to be to commercially credit worthy insurance carriers
  2. Your invoices need to be free of liens
  3. Your company must be free of legal and tax problems

Additionally, most factoring lines are tied directly to your revenues and can dynamically grow as your sales grow. This makes it an ideal solution for auto glass installers who have cash flow problems but solid growth potential.

Filed Under: Business Services

Factoring Financing For Medical Transcription Services

December 19, 2011 By

The medical transcription business is very competitive and demanding. Most owners need to juggle multiple responsibilities such as managing employees, solving issues for medical clients and managing the company’s cash flow. Managing the company’s cash flow can be a difficult task because most transcription companies need to pay their employees (or contractors) on a regular basis – usually weekly or monthly. Customers, on the other hand, pay their invoices on a net 30 to net 60 day term basis. So it’s up to the company to cover all expenses while waiting to be paid. This is usually not a problem for companies that have a cash reserve – since they can use it to cover expenses until customers pay. But if the transcription company is small, growing or does not have a reserve, this could turn into a serious cash flow problem. One effective way to solve this problem is to use factoring financing.

Invoice factoring can accelerate the funds that are locked up in slow paying invoices from medical offices or hospitals. It can provide the funds your transcription business needs to pay employees and other critical business expenses. It enables you to focus on growing your business rather than on chasing invoices. However, your customers do not have to pay their invoices sooner. Rather, an invoice factoring company advances funds to your company using your invoices as collateral. The transaction settles once your customer pays the invoice in full.

One important advantage of factoring over other business financing solutions is that it’s relatively easy to obtain. There are three requirements that must be met:

  1. The medical transcription company must invoice credit worthy medical offices and hospitals
  2. The invoices must be free of liens
  3. The company must be free of legal and tax problems

Most factoring financing lines are also very flexible because they are dynamically tied to your sales (i.e. your invoices). This means that the line can increase as your sales grow, provided your medical customers have a solid commercial credit rating.  Factoring is an ideal solution for medical transcription companies that are not realizing their growth potential due to the cash flow problems created by slow paying customers.

Filed Under: Medical

Factoring Financing For Information Technology Companies

December 19, 2011 By

Most information technology companies have complicated cash flows – especially those that supply both equipment and consulting services. A common cash flow problem stems from the fact that most expenses need to be paid quickly, while the revenue that is associated with those expenses is paid slowly by customers. Let me give an example. Let’s say a customer orders new servers that need to be installed and configured. Additionally, they order software that must be deployed on those servers. The IT company will need to pay the server provider and the software provider shortly after taking delivery. Likewise, it will need to pay the salaries of the employees doing the installation, configuration and deployment of the equipment and software. However, if the customer is like most customers, they will get net 30 to net 60 days to pay their invoices. In the meantime, the IT company is stuck with the bill. And therein lies the problem. One way to solve this problem is to accelerate the funds due from customers using invoice factoring.

Invoice factoring can provide the funds you need to cover your operational expenses without having to worry about when your customer will pay. Actually, your customer pays on their usual schedule.  You get the funds from a factoring company that advances the cash to your information technology company and uses your invoices as collateral. The transaction settles after your customer pays their invoice in full. Factoring provides stability and predictability to your cash flow, allow you to manage your business more effective and focus your efforts on growth initiatives.

One important advantage of factoring is that it’s easier to obtain than other business financing solutions. There are three important requirements needed to qualify:

  1. Your invoices need to be payable by credit worthy companies
  2. Your invoices must be free of liens
  3. Your company must be free from legal and tax problems

Perhaps the most important benefit of factoring is that the size of the financing line can easily increase to accommodate the growth of your IT business. Since the line is based on your invoices, it can track your revenues, provided your sales are to credit worthy companies. This makes factoring a little known but very valuable tool for information technology companies that are growing but have cash flow problems.

Filed Under: Technology

Factoring Financing For Software Development Companies

December 19, 2011 By

Software development companies tend to have high payroll costs. They have highly skilled employees that are in great demand and require substantial compensation. Still, owning a software development company can be very profitable since most projects carry high profit margins. However, many software development companies can easily run into cash flow problems if they don’t monitor their finances closely. A common cash flow problem originates from the fact that most company expenses have to be paid quickly – rent, payroll, etc. But customers pay their invoices 30 to 70 days after the project has ended. If the software company does not have a large enough cash reserve to cover expenses, it will run into problems. There is one way to fix this problem – easily and quickly – it’s called factoring.

Invoice factoring accelerates the funds due from invoices, providing the cash your company needs to meet expenses and pursue growth opportunities. Your customer does not have to pay sooner – though. Rather, a factoring company advances funds to your software company using your invoices as collateral. The invoice factoring transaction closes once your customer actually pays the invoice.

One advantage of invoice factoring is that it’s easier to get than other sources of business financing. Most factoring companies do not follow the standard underwriting procedures that banks follow. Rather, they look for companies that have invoices from solid customers. Aside form that, they also look for companies whose invoices are not encumbered by liens or tax/legal problems. Most small and growing development companies should be able to meet these requirements.

Since factoring is easier to obtain than other business financing solutions, it’s commonly used by start ups and new companies that don’t qualify for conventional financing. It usually serves as a stepping stone that leads to other future financial solutions. This makes it a great alternative for software development companies that need funding to be able to capitalize on their growth opportunities.

Filed Under: Technology
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