Factoring Articles

Accounts Receivable Factoring and Health Care.

Research released in 2009 U.S. Public Interest Group (USPIRG revealed that 17 percent of small businesses currently do not offer health coverage due to the red tape and high costs. Successful health reform could yield some serious benefits for small businesses in the United States. The research also stated that 78 percent of those small businesses who do not offer health coverage would like to offer it to employees. Accounts receivable factoring for small business can convert payments on terms to cash on delivery, aiding small businesses in their effort to pay for health care costs for employees. Here's how accounts receivable financing could assist small business owners with being able to afford health care coverage for their employees.

The typical small business owner has accounts receivables ranging from 30 to 60 to 90 days out, so, rather than waiting for these accounts to be paid, small businesses can convert payments on terms to cash on delivery faster, and then they can apply these funds to health care costs if they use invoice factoring.

The research also revealed that small business owners who do make the sacrifices necessary to provide health care think that it is a smart business strategy to increase employee productivity.

Single invoice factoring, also known as accounts receivable factoring, has become popular, as factors do not expect to buy 100 percent of a company's receivables. Accounts receivable financing benefits businesses that do not get paid for 30 to 60 or 90 days by advancing up to 90 percent against invoices. The factoring company will look at the creditworthiness of the client's customers. Funding can often be provided in 24 hours, and a commission fee is involved.

In light of the recent economic downturn invoice factoring has become a highly effective cash management tool today. It is most often small businesses that experience cash flow problems during a recession, and many employers find it difficult to meet payroll, buy supplies, let alone pay benefits and Workers Compensation. Factoring allows businesses to obtain funds based on the money they know will be coming in.

Factoring is not the same as a traditional bank loan. Rather it is the purchase of financial assets, or accounts receivables. Bank loans involve two parties, while factoring involves three. Banks base their decisions on a company's creditworthiness, whereas factoring is based on the value of the company's receivables.

Most factors' professional rates are competitive because each client's circumstances vary, which may have an impact on the fees.

Accounts receivable factoring has been around for more than 4,000 years. For more information call The Interface Financial Group (IFG) at 877.210.9748.

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