A Beginners Guide To Factoring
Why would I use Factoring?
You own a small business. Business is great. If only you could lay your hands on some additional working capital,
you could expand your company and take it to new heights. Whether it's a one-time need, or an ongoing necessity,
working capital or the lack of it, is often the difference between success and failure. Factoring is a financial
solution to help you obtain working capital just when you need it the most.
What is Factoring? Although factoring has been around for over 4000 years, it is one of the least known and most
misunderstood financial tools available to small businesses. Factoring is NOT a loan! Factoring is a financial
purchase or transaction involving three parties ? you (the client), your customer and us (the factoring company).
The biggest difference is that with a loan it's your credit that matters, but with a factoring agreement it's your
customer’s credit worthiness that matters most. Sometimes, this can make all the difference in the world.
You've heard about factoring. You even have grasped most of how factoring works in practice. The next question
is how do you know whether factoring is right for you and your business? There's a time and place for everything
and that includes what the right times and conditions are for a small business to use spot or invoice factoring to
speed up cash flow, increase working capital and grow their business.
While often confused with accounts receivable factoring or invoice factoring, accounts receivable financing
technically refers to a loan agreement between two parties. The biggest difference is that with a loan, it's your
credit that matters, with a factoring agreement it's your customers credit worthiness that matters. Sometimes,
this can make all the difference in the world.
As the name implies, spot cash loans are frequently used to get you and your company out from under a tough spot. Frequently, spot factoring services can be used to provide these spot, or immediate cash injections, thereby ensuring the companies continued success. If your company is struggling with cash flow issues, a spot factoring consultant from IFG may have the answers.
We invite you to contact us by clicking here if you have any questions concerning single invoice factoring, or
are interested in learning how factoring can be of assistance to your business. You are also welcome to give us a call at the IFG corporate offices at 1 800 937 312. We'll be happy to discuss your factoring options.