Factoring Unlock The Money You Ve Already Earned

Factoring Unlock The Money You Ve Already Earned



Factoring: Unlock the​ Money You've Already Earned
If you run your own business there’s no reason to​ wait thirty days or​ more to​ get paid - you can now have the​ money paid within 24 hours.
When you run a​ small business which depends on​ your customers making timely payments,​ you may find certain times of​ the​ year to​ be hard going .​
Even with your business being a​ really solid going concern,​ at​ times you may not be able to​ find the​ necessary cash for running your operations.
This can lead to​ some vicious cycles: your suppliers are discontent with your payment delays,​ so you may lose out on​ some good deals .​
Your employees get frustrated if​ they don’t receive their wages on​ time,​ and this can lead to​ a​ loss in​ productivity and higher staff turnover rate .​
So when you do finally get paid and you want to​ pick up activity again,​ you may have no one to​ supply you and no one to​ get the​ work done!
You need cash up front .​
What are the​ alternatives?
There are a​ number of​ ways for you to​ get more cash into your business:
* Inject personal funds .​
This is​ not usually an​ ideal solution.
* Find a​ new investor,​ if​ you are prepared to​ give away equity in​ your business
* Use an​ overdraft .​
a​ solution that usually implies a​ great deal of​ time and a​ lot of​ conditions your business has to​ comply with .​
Overdrafts can be recalled at​ any time and can be restrictive on​ your business.
* Apply for a​ bank loan .​
In this case you may be spending a​ lot of​ time only to​ find out that you are not eligible .​
Small businesses aren't usually banks' favorites when it​ comes to​ loaning them money.
The good news is​ that you don't actually have to​ wait .​
a​ good way to​ avoid these cash flow gaps and not enter the​ vicious cycle is​ to​ set up an​ agreement with a​ factoring company.
How to​ use your own money?
If you’re thinking that the​ money you've honestly earned is​ all locked up in​ outstanding or​ aging invoices,​ think again .​
a​ factoring facility can really work for you and help you to​ unlock the​ cash in​ your business.
Your invoices can be as​ good as​ any other assets from a​ factoring company’s point of​ view .​
Through factoring you can capitalise on​ your largest asset,​ your sales ledger today as​ opposed to​ waiting for payment from your customers.
How do you put an​ invoice through a​ factoring company?
The process is​ simple .​
When you invoice a​ customer you also send an​ electronic copy of​ that invoice to​ your factor .​
Then,​ within 24 hours or​ less,​ the​ factor advances you up to​ 90% of​ the​ invoice value .​
The factor usually takes on​ the​ responsibility of​ collecting the​ money from your customer the​ day the​ invoice is​ due to​ be paid .​
After that step is​ accomplished,​ the​ factor pays you the​ rest of​ the​ money,​ minus a​ small fee for the​ service.
For small to​ medium companies outsourcing the​ sales ledger management function can be of​ great benefit because it​ saves you the​ burden of​ managing invoices and undertaking the​ collections activity .​
By contracting out that element,​ you can effectively distance yourself from that function and concentrate on​ the​ relationship with your customers and focus on​ sales.
An additional service offered by such companies is​ protection against bad debts,​ which would typically cover up to​ 90% of​ the​ outstanding balance on​ any customer,​ where you have a​ designated protection limit in​ place.
Why should you use factoring?
Factoring is​ a​ complementary solution to​ be used alongside your standard banking facilities .​
You should look for the​ right factoring solution for your business.
Here are a​ few reasons why factoring should be another source of​ cash to​ consider:
* Because you'll never run out of​ cash again as​ a​ consequence of​ extending the​ payment terms to​ your customers.
* Because the​ facility will grow in​ line with your business growth
* Because the​ facility will allow you to​ take up opportunities available to​ you .​
to​ propel your business forward
* Because you can grow your business at​ the​ right pace without worrying about how long it​ takes your customers to​ pay you.
* Because you want the​ competitive edge against your competition.
Factoring is​ a​ financial tool that will allow you to​ obtain cash advances by capitalising your invoices,​ while at​ the​ same time easing your workload.




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