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Business Receivable Factoring

Businesses face monetary difficulties from time to time. Most business people start business ventures with bank loans, equities and mortgages. Only few business people use their own money to start businesses. Even after starting, they face many financial difficulties. When the situation is dire, they are unable to take loans from financial institutions, as they do not possess any assets to offer as securities.

However, every business has one asset that they can use to find finance. For every business, customers are the invaluable assets and if businesses know how to protect and increase their customer base, they can use this asset to get finance whenever they need.

Not only declining business ventures but also profitable businesses use customer base to get money for their advancement. It is the source of cash flow to any type of business. There are lenders and lending companies that deal with this invaluable asset and supply money to their business clients uninterrupted.

The business receivable factoring is such a method. With this method, business people sell their receivable invoices to factoring companies at a discount and factor companies provide them with cash within 24 hours, which otherwise business people have to wait from 1 to 3 months to receive payment from their clients. Many businesses worldwide use this method to keep their cash flow intact from delaying payments. They sell all, or some of their receivable invoices to factoring companies daily and they handle all the other aspects of clients' relationships till the repayments are made.

The discount from the face values of receivable invoices is the profit the factoring companies make. The factoring companies provide companies with cash up to a percentage of the face value. Mostly this percentage is in between 60 to 97 percent. The balanced will be remitted to the seller companies after the repayment is done. The discount is normally deducted from the balance.

The business receivable factoring is not a loan scheme. It is a business, in which, companies sell their receivable invoices to factoring companies at a discount and factoring companies get profit out of the repayments, which is due after sometime while granting a percentage of the total amount to the seller company within 24 hours.

Most factoring companies take the risk of no payment. They do account management, customer relationships, credit analyzing, billing procedures etc., for the clients' companies. There are many other benefits as well such as credit card systems. You can find good business receivable factoring companies on the Internet. You have to research first by surfing many factoring websites to find a company with fewer discounts, maximum advances and other benefits.

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