Stimulate Company Growth Using Accounts Receivable Factoring
MoneyMoz.com presents you “Stimulate Company Growth Using Accounts Receivable Factoring”, an article written by Henry Byers. We hope you’ll find a lot useful information in here.
MoneyMoz.com will present you every article we find interesting and educating, and which has no copyright protection. If available we’ll link the source.
Accounts receivable factoring is the sale of part or all of a debt that someone owes to your company. When companies purchase a debt through accounts receivable factoring, they pay for your invoice at a discount. They then collect the debt directly from the company who owes you money.
Accounts receivable factoring is distinct from using your accounts receivable as loan collateral because you are outright selling some or all of your receivable to a factor, such as a bank or insurance company, at a discount. You don’t collect the debt owed to you from that account anymore, but you also don’t have to worry about loan repayments. Accounts receivable factoring makes up about a third of all financing secured by American companies using accounts receivable and inventory as collateral; it’s not an uncommon practice. And accounts receivable factoring can help you get large orders that you otherwise wouldn’t be able to manage.
| MoneyMoz recommended article: Small Changes To Your Resume Can Make A Big Difference Sometimes during a job search you reach a point where you must ask, why am I not getting calls from decent companies for interviews. After sending out tons of resumes with little or no response, you need to reevaluate your position and try to make some changes. Some times minimal changes to your resume and cover letter will have a drastic effect on the number of calls you are receiving. A good first step is to search the internet for free sample resumes for the type of position you are looking for and see what people are putting on their resume. Advertising Salesmen Say; You Rarely Get Results Right Away If you own a small business there is no doubt you have been approached by advertising salesmen and women peddling ads in their media outlets. And it is amazing to me how many tell us that we should not expect results right away? Why not, that is what we are paying you for you dummy. What in the World are you selling; you show me charts, graphs and supposedly empirical proof of why your medium is where I should spend my money then ask for the check and tell me not to expect results right away? Go die scum! The truth is that if their venue is truly that great then in fact you should see results right away. Look before I get into an argument with Marketing Consultants who write books and sell seminars and maybe even make kick backs from advertising referrals or before I am condemned by advertising “good looking” sales folks, let me pull rank. I am the founder of a franchise company, which set up units in 23-states, 450 cities and 110 major markets. And we always got noticeable results from our marketing and advertising immediately. |
Consider the following scenario: you have ten thousand dollars in cash on hand, most of which is currently earmarked for payroll or debt payment. As a relatively new company, you don’t have credit enough to use your accounts receivable as collateral for a loan. A large new account becomes available, and you bid on it and win. The problem is, you only have a workforce of fifteen people, and the new contract requires you to staff it with twenty people, purchase several new computers, and find space for the new staff to work out of. And you must do this immediately.
Your ten thousand dollars isn’t enough to do this, and you can’t get a loan. But you can engage in accounts receivable factoring, sell your current receivables at a small discount, and have the cash immediately on hand to hire the staff, rent the space, and purchase your necessary equipment.
Another possibility - you have a large amount owed to you as in accounts receivable, but one company is paying much too slowly, despite the penalties for late payment. You can sell your not-past-due accounts receivable to an accounts receivable factoring agent in order to maintain your cash flow, and with penalties for late payment applied to the other company, you will probably break even.
Using Accounts Receivable Factoring Wisely
When you sell part of or all of an account to an accounts receivable factoring company, try to get a personal recommendation for the company from a trusted associate: another company’s officer, a trusted friend, a bank, etc. If you can’t, at the very least ensure your accounts receivable factoring agreement states exact conditions, charges, and procedures for the purchase of your accounts receivable.
| MoneyMoz recommended article: Why Write a Sales Letter for Each Product? Authors/publishers are great at getting their books written. Entrepreneurs know their products. But after the initial one-year honeymoon, sales slow down. To counter this make sure your ebook, product, or service you offer will keep on selling from the first day, the first year, even for life. Write a short sales letter for each product or ebook. Whether you have a Web site or not, you can write a first class, must-buy-now sales letter. Write one for each teleclass, eBook, product, or service. I even write one for my bookcoaching services. |
And don’t use accounts receivable factoring just as a way to get ready cash. Accounts receivable factoring can help you determine whether your payment terms are overly generous, whether the companies to whom you’re extending credit are credit worthy, and whether your collections arrangements are adequate for your business. When you speak to the agent arranging your accounts receivable factoring, be it a broker or the actual funder, ask about these things. Accounts receivable factoring companies are interested in long-term ongoing relationships with companies, and will be happy to help you ensure your procedures and information concerning accounts receivable are adequate for your needs.
You should never use accounts receivable factoring for debts you suspect won’t ever be paid. Again, you want to develop long-term relationships with accounts receivable factoring companies; they can help your company grow for a long time into the future. But if you sell them accounts they can’t collect on, you can be certain they won’t work with you again, and they may share that information with other accounts receivable factoring companies as well.
Henry Byers, Accounts Receivable Factoring advisor - focusing on Business Factoring and Factoring Receivables
Keywords assigned to this article by MoneyMoz: Factoring Services,Invoice Factoring,Invoice Discounting,Factoring,Accounts Receivable Factoring
| MoneyMoz recommended article: Five Essential Questions: Business Ethics Ethics are the focus of much discussion and media coverage in the post-Enron and WorldCom scandal tainted world of business. Leadership, always an area of study for organizations of all types and sizes, is receiving even more attention as a result of corporate and other forms of corruption (such as the recent events with Tom Delay in Congress and the “K Street” lobbying investigations of Jack Abramoff and others in Washington, DC). But when it comes to ethics-based leadership, while there is a growing volume of literature there are few role models (at least those who are still living and breathing, rather than in the history books and biographies). Given these circumstances, where can one go for “real world” guidance when it comes to ethics-based leadership? There are several key questions that leaders at all levels and in any type of organization – be it a large or small business, non-profit, government or the professions can ask oneself and others: Real Estate Marketing Strategies: How to Stop Struggling and Start Attracting Having been a business coach for Real Estate Agents for more that 10 years, I often hear my clients say things like, “Why does this have to be a Struggle” or “I'm feeling desperate, I need more clients.” They try the right marketing approaches , they manage their time and it looks like they are doing everything they can. However most business owners are missing the key ingredient: The Law Of Attraction. |