Here’s How Factoring Is Better Then A Loan

There will definitely times when factoring will be more advantageous for a company then a loan or line of credit. Factoring does not require a company to take on new debt. It is a faster way to get money then a loan, there are no interest payments and obtaining money from a factor is much easier then from a bank. In this article, we will take a closer look at how factoring is better then a loan or line of credit and when it is best to utilize this financing option.

Money does not have to be paid back: If a company takes out a loan or a line of credit, they will have to pay it back, with interest. While most companies are fully aware that loans are a normal part of staying in business, many would prefer not to borrow money if they don’t have to. A good number of businesses would be more then happy to finance their needs without having to pay back any money.

Invoice factoring gives companies the opportunity to do just that. This form of financing does not require a loan. The more money that a company borrows, the more difficult it is for them to receive a loan in the future. If a business can use a mix of financing and not be so dependent on debt, they give themselves more options down the line.
Read more

Financing Your Business During A Recession

During a recession it can be extremely difficult to finance a business, much tougher then it would in an otherwise healthy economy. Banks are very slow and hesitant to give out loans because the likelihood that they will be paid back significantly decreases. Bank loans are difficult for new companies to receive even in a strong economy. It generally takes really strong financials, lots of assets and it requires that the company has been in business for a good amount of time before a bank feels comfortable lending them money.

The problem is that a large percentage of companies do not meet these criteria. As a result, many businesses are left out in the cold with the burden of finding a way to finance their endeavors and growth. In this article, we will take a look at why you should consider using invoice factoring to finance your business during a recession.

There are many benefits to invoice factoring.
Read more

California Nears Financial “Meltdown” as Revs Tumble

Wed Jun 10, 2009 7:31pm EDT

By Jim Christie

SAN FRANCISCO (Reuters) - California’s government risks a financial “meltdown” within 50 days in light of its weakening May revenues unless Governor Arnold Schwarzenegger and lawmakers quickly plug a $24.3 billion budget gap, the state’s controller said on Wednesday.

Underscoring the severity of California’s cash crisis, Controller John Chiang, who has previously warned the state’s government risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.

Additionally, the revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger’s budget plan by $827 million, Chiang said.

He warned California’s state government is speeding toward a financial disaster unless officials act urgently to balance its books.
Read more

Factoring Vs. Banking

When a company is looking at available options for financing their business, they will find that there is a world of difference between working with a bank and a factoring company.

Banks require much more proof that your company is an acceptable lending risk. It may be necessary to have asset collateral and to be profitable for a minimal number of years before they are willing to part with their money. Being in a position to receive these types of loan can be extremely difficult for a new business and for those that may be struggling and need an immediate infusion of cash to keep them afloat.
Read more

Using The Internet To Find a Factoring Company

You may know exactly what your company is looking for in a factoring company. You just may not know how to locate one that has all of the attributes that you are looking for. The internet can be a tremendous resource to find a factoring company.

There are many factoring companies advertising their services online. Finding these companies online isn’t the problem, figuring out which ones are good, is the hard part. Knowing how to research a factor and to ask the right questions can help your company determine if a particular factor is worth starting a dialogue with.

As a general rule, it is best to go with a factoring company that is established and in every instance, reputable. It is important to work with companies that have been in business at least 10 years and are recognized within the factoring industry.

Why Do Companies Use Factoring Services?

Any business that invoices other businesses or government entities for delivered goods and rendered services can benefit from factoring.

Many business owners find these services beneficial because they:

• Are experiencing rapid growth and need to purchase materials, pay vendors and cover operating expenses
• Want to obtain immediate cash for any business use without creating a debt — no principal or interest to repay
• Want to expand their line of business or take on larger accounts
• Are labor-intensive industries and need to meet payroll
• Are start-ups with no financial track record
• Have seasonal cash flow crunches
• Need short-term cash to use as a bridge loan
• Need to improve the business’ credit rating
• Need to make timely tax payments
• Want to benefit from trade discounts
• Have State or Federal tax liens