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Improve Your Cash Flow With Business Factoring

Jul 7, 2008
All businesses big or small face situations where they feel a cash crunch would hamper their growth opportunities. Usually, it is difficult for a company to arrange for loans and advances from banks as banks require substantial assets as collateral. In such situations the cash flow needs can be satisfied if you approach financial institutions for business factoring options. Business Factoring is to sell accounts receivables to factoring companies in exchange of instant cash.

Business factoring is a very good option available for companies who are short of funds when they need finance at the right time to grow their businesses. This is highly essential for small businesses that are on a fast track towards growth. They need to have cash in hand to keep business going. Lack of cash in hand is like having no fuel in your car to move any further.

Very often banks are considered to be the only source of funds. But there are other options open for you when these banks would not agree to fund your needs. Other financial institutions and factoring companies are ready to give you ready cash even if you do not have very high credit scores. These institutions are not interested in your building or equipments they are only interested in your account receivables. If you have accounts receivables from credit worthy customers you actually have something with genuine value that they may be ready to buy.

When you sell accounts receivables there is no new debt created. You are able to enhance your balance sheet by reducing the accounts receivables. It shows a very good financial situation for you. You are simply getting cash by selling off your assets. This brings you in a situation when you can easily expand your business when you are able to get new contracts. You need not wait for payments to be received before you can start off with further production. You can even offer discounts to your customers, which can help you, get more orders. More orders mean more receivables and more receivables mean more opportunities to grow with immediate availability of cash.

When you are funding yourself by selling these receivables for cash, you can bring in a discipline in your finances. You can space out when you would sell these. If you do not need cash immediately you could keep the receivables and use them only when you feel the need for cash.

Factoring is favored by small businesses to satisfy their business needs, as it does not have any constraints of credit scores or your experience. It involves very less paperwork. The entire process may not take more than 3 days. When it comes to timely availability of cash to support your business growth it can give a boost to your business. If you have substantial invoices to show, it means you have good assets and have factoring opportunities. The factoring companies also assist you by taking the collection responsibilities. You can concentrate on other activities and need not worry about the receivables.

The business factoring market is gaining popularity and has even been able to save some businesses from going out of business. It has provided these businesses the fuel that they need for growth- better cash flow.
About the Author
If you need a reputable Freight Bill Factoring Company then check out Phoenix Capital Group. They have been named one of the fastest growing companies by Entrepreneur Magazine . Check out their rates on their website at http://www.phoenixcapitalgroup.com
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