Instead of waiting 30, 60 or 90 days for payment from businesses, you can receive cash within 24 hours for goods or services. Advance funding of receivables, also known as Factoring, is converting the accounts receivable of a business into cash by selling outstanding invoices to a 'factor' (factoring company) for a discount. Factoring gives the business immediate cash to manage its operations more efficiently when current working capital and alternative capital sources are inadequate.

Factoring does not create debt or require additional collateral. It is very simple to use. With the cash flow delimma solved, your business has the working capital to pay salaries, reduce debt, improve vendor relations and focus on critical success factors - operations, sales and growth.

Many businesses have not considered selling receivables when looking for financing, possibly because they do not understand it. However, factoring is one of the oldest methods of providing working capital to help businesses solve their cash flow needs. Cash flow challenges often occur at the early stages of business when survival is an issue or during periods of rapid growth - when completed work is unpaid for 30, 60, or 90 days after issuing the invoice. Thus, businesses often apply for short-term debt financing.

However, conventional borrowing increases business expenses and normally requires additional collateral. Some companies - especially smaller ones - are turned down by banks because of loan underwriting criteria. Equity financing is generally harder to find than debt financing. And, once found, it takes longer to arrange.

Selling accounts receivable to generate cash is a finance method used by very large corporations worldwide, with the factoring service being provided by the largest banks in the nation. In the past, only large corporations with millions of dollars in receivables per month qualified for factoring. Previously, factors avoided working with smaller companies and companies with a large number of small invoices, but things have changed. Because receivables funding is widely known, your customers will view this as a positive ability on your part to secure financing, not as a problem with cash flow.

Additional Working Capital can be used to:

Increase sales and profitability
Take advantage of supplier discounts
Increase staff or fund payroll
Purchase equipment
Increase inventory
Improve your credit rating

It's likely that many of your customers already deal with factors and may not even be aware of it. Sometimes payments for invoices directed to a P.O. Box are actually going to a factor. Shell Oil, Georgia-Pacific, IBM and other substantial companies factor millions of dollars of their receivables every year. Funding obtained through the sale of receivables is most often used by a firm to expand and take on larger projects; not merely for cash flow or payroll. Now that this service is available to companies like yours, you can enjoy both the perception and the reality of being a growing company, moving forward.