Daily Archives: February 23, 2010

The Advantages of Fast Funding Via Factoring

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Also known as factoring accounts receivables, factoring begins with due diligence that usually takes one to two business days. Once completed the client is at liberty to offer invoices to the factor for purchase. Upon receipt of invoices, the factor checks the credit of the debtor named on the invoice and makes sure that the sale has been satisfactorily completed. Next the debtor is advised of the purchase by the factor and the client receives funding.

Factoring is not a loan – it is the purchase of financial assets, or receivables, and it differs from traditional bank loans in that bank loans involve two parties, while factoring involves three parties. Banks base their decisions on a company’s credit worthiness, whereas factoring is based on the value of the receivables.

Also known as factoring accounts receivables, once a factor has approved the debtor, invoice factoring benefits businesses that do not get paid for 30 to 60 or 90 days. Due diligence efforts typically take a day or two, then factor advances up to 90 percent against the invoices. Often the turnaround is in less than 48 hours. What’s more, there are many companies who don’t expect to buy 100 percent of a company’s receivables.

Best-of-Breed Survival Tip for Small Businesses

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There are many businesses that have stayed in business and benefit from the working capital garnered from factoring accounts receivables for small business in the face of tight credit at mainstream banks. First documented in the American colonies before the revolution, at a time when materials and/or goods were shipped from the colonies to the Americas, factoring is not a loan but it’s the purchase of financial assets, also known as receivables.

Factoring benefits businesses that do not get paid for 30 to 60 or 90 days by advancing up to 90 percent against invoices. The factor generally looks at the creditworthiness of the client’s customers and can fund within as little as 24 hours. Most companies do not expect to buy 100 percent of a company’s receivables.

During the Industrial Revolution, factoring invoices became more focused on the issue of credit, as factors guaranteed payment for approved customers. | Invoice factoring became more focused on the issue of credit during the Industrial revolution. It was before 1930 in the United States when factoring occurred and it was primarily for the textile and garment industries, and then after the war years, factoring expanded to other types of businesses.

When interest rates rose during the 1960′s and 70′s, private factors became popular and it intensified in the 80′s due to the changes in the banking industry and interest rates. Small businesses were forced to find other sources of financing for expansion and growth so factoring became more widespread.

By using factoring, also known as factoring accounts receivables, it is easiest to keep your cash flow flowing, you will have the edge over the other guy, so you can order more supplies to build more products, keep your employees and sales staff on, pay all your bills, and in turn sell more.

Factoring invoices doesn’t work like traditional bank loans involving two parties, as factoring involves three parties. Banks base their decisions on a company’s credit while factoring invoices is about the value of the accounts receivables for a company. There are no minimums or maximums, and no long-term commitments.

Projections ahead for the year 2010 include the fact that businesses will be factoring accounts receivables – less for survival and more for stability and growth.

New Business Entrepreneurs Factor Invoices for Steady Growth

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According to the American Recovery and Reinvestment Act of 2009 from the Executive Office of the President, Council of Economic Advisers, the jobs that were saved or created by the ARRA of 2009 include: for the fourth quarter 20091.5 million jobs were saved. Projections for 2010 are around 3.5 million, and in 2011 the numbers are at 1.7 million, while in 2012 the statistics are at .3 million.

While many Americans are out of work, they have started small businesses t survive. Many have scrambled to borrow money from their savings accounts, family or friends. And now these hard working folks are working to keep their new businesses afloat.

What many new business entrepreneurs don’t realize is how effective the strategy of factoring accounts receivables can be to maintain solid growth. Once their business is up and running, in order not to run into the problem of a cash flow crisis, factoring invoices has become a popular strategic maneuver. And never take funds from an angel investor if you don’t know you can multiply it. What’s more, raising funds from investors is often faster after you have revenues because they like the idea of investing in a business that’s already generating revenue.

Construction Factoring and Trends for 2010

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The 2010 Construction Outlook, was released by McGraw-Hill Construction in October of last year. The report forecasts an increase in overall U.S. construction starts for the following year.

Projections for 2010, thansk to improvements for housing from extremely low levels and broader expansion for public works, is expected to climb 11% to $466.2 billion, following the 25% decline that had been predicted for 2009.

The report idicated that the U.S. construction market in 2010 will be helped by growth for several sectors, following three straight years of decline. Many builders and general contractors used financial tactics like construction factoring to aid their bottom line, and of course they hope to be able to make it until the economy recovers.

Other indicvators stated that the benefits from the stimulus act will broaden and lift not just highway construction but also environmental public works, plus institutional structure types. Institutional buildings will begin to stabilize after losing momentum in 2009.

In 2010 improvements are expected for single family housing, after reaching bottom earlier in 2009, so overall, the level of construction activity should see moderate expansion in 2010. And if not we’ll see a trend towards construction factoring continuing throughout the year.