Invoice factoring is the practice of selling the interest in receivables or invoices to a third-party, or "factor," at a discount. By factoring receivables a company can leverage the value of its receivables by collecting the funds from the factor well in advance of the payment by its customers. Factoring receivables allows a company to reduce payment turnaround by 30-45 days.
An example of a factoring transaction may occur as follows:
A factoring agent may purchase invoices from a particular company the face value of which is $100,000. However, the factoring company may pay the company $80,000 or 80% of the value these receivables. The factor then bills the invoices, collects the revenue and then returns between $16,000 - $18,000 to the sourcing company. The cost to the company, then, is approximately 2-4% of the original invoices but the benefit is having cash-in-hand quickly.
Large corporations have been factoring receivables for many years. It is only recently that smaller businesses have had this funding mechanism available. Banks may be reluctant to provide capital to a company without substantial assets. The practice of invoice factoring enables smaller companies to leverage the booked value of receivables without incurring debt.
Factoring receivables allows these companies to convert their accounts receivable into instant cash. Once they have delivered a product or service and generated an approved invoice, they can get their money in as little as 24 hrs. Factoring receivables can help a company stay current with its vendors and meet other financial obligations such as payroll and taxes.
Other types of financing generally require two years in business and showing a profit. Factoring receivables does not have this limitation. Young, growing companies or those with tax liens and even bankruptcy can still qualify for accounts receivable purchasing lines.
A company may be interested in factoring receivables in order to take advantage of opportunities that require immediate cash. Some companies may want to fund some operational expense while others may want to invest in an expansion project that would ordinarily be delayed. No matter what the reason, it is extremely helpful for a company to know that by factoring receivables it is possible to reap the benefits of sales now, rather than later.
One sector uniquely dependent on invoice factoring is the trucking industry. Trucking companies are cash spewing machines. Every single day, company trucks and owner-operators line up at the pump to fill up with $4/gallon or higher diesel. Add in maintenance, tolls and salaries and it's all some companies can do to keep things going each day. That is why factoring receivables is so critical to the trucking industry.
With the recent problems in the financial sectors, credit has been hard to come by. Even if a company decided that they wanted to take some sort of loan, there are not many banks willing to provide financing. That is why freight factoring is so critical during an economic downturn.
During these difficult economic times, business owners that are feeling the cash squeeze may want to consider invoice factoring to convert receivables quickly into sorely needed cash.
Management Of Cash Flow
How to make money on the internet with your own automated, autopilot website that generates cash with a streamlined automated system:
I remember the good days of real estate, but the real estate crash was probably one of the best things that ever happened to my finances. Why? I discovered the way to make money on the internet. I remember that first house I bought. The smell in it was so bad that my son started crying when I took the family there! I mean the previous owner's dogs and cats just did their thing indoors, and nobody seemed to care. I gutted it and fixed up the house. It wasn't easy, but $45, 366 later, it certainly was the easiest money I had ever made.
I did it again and again, and with much less effort. I was writing the checks and hauling materials to the next houses. The contractors fixed it, and I was making money. Then 2006 came along, and I was determined to make ten times as much money with all the knowledge and experience I had garnered.
By this time I had about $20,000.00 of real estate courses under my belt. And while I was full time busy with my regular job (because I loved it), I was making tons of money on the side. No, I was by no ways at millionaire status, but I was doing good. So I went ahead and bought two more houses?the first two of ten or twenty I was going to flip that year. I put out a sign in the yards, and hardly anybody called on my signs. And those who called were just looking for bargains, and offering way lower than the lower price I had paid for it.
Then I had my first break in into a house while I was away on business. Then the thieves broke back into the house the next day, and the next, helping themselves with no fear. Then my contractors disappeared, and I wondered if there was any dots to connect here. After a while it dawned on me?the housing bubble had popped, and I had two houses in the middle of rehab. And I had major monthly payments to make on the mortgages, and I was in trouble.
Not months, but nearly two years later, I got rid of those houses, and lost more than $85,000.00 on them. This was not my idea of making money.
Then things started to happen for me. On a vacation in Florida, I spent hours upon hours on the internet trying to find ways to make money on the internet. I saw a few things, but I gave up on it because nothing really ?clicked.? But I knew I was getting close. One day a friend of mine, who also had had his hard knocks in real estate told me about the IPC program. He was making ?only $400 extra? week because he was too busy with his regular job, but that it helped pay the bills.
I wish I had jumped onto this legitimate on the internet money making system right away. If I did, I would have saved me many months of financial sorrow. This was a system that gave you're a automated, streamlined cash flow. That is why I named my website http://www.StreamlineCashFlow.com. The author of this awesome on the internet money making cash flow system is Dan Miller, who has only been successful in everything he had going. By no means am I rich yet, and it will take me a while to get out of my real estate hole. But finally I am steady on my way to wiping out my debt, and build a future for me, my family and my dreams.
I want to share the blessing with you. Go to my website http://www.streamlinecashflow.com or go to http://www.youtube.com/watch'v=hV3AFENH8zg to see a video that I made, showing you exactly how this on the internet money making automated cash flow system works. I also have a blog at http://generatemoneysonlines.blogspot.com. .
Feel free to email me to streamlinecashflow@gmail.com if you have any questions.
Both Terry Mcdermott & Ron Settler are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Chinese Pottery And Porcelain With the coming of porcelain in Europe the Chinese monopoly was broken but the name of Chinese porcelain still generates enough interest among the people because the people trusted the product of Chi...