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Small Business Factoring; Solves the Cashflow Issue
Today I had the pleasure of putting together an Invoice Factoring deal for a client that was the perfect solution for his company. These are the days I really like and that make me feel good about my career.
In this scenario, my client is an industry service provider for the major companies in the Telecommunications Industry. They are going through some changes in technology right now in their industry My client has been able to elevate himself as a preferred supplier by the Telecom Companies and he has been awarded some significant contracts.
On the outside looking in it looks like a great success story, right? Consider this. Now he has to hire more staff, more equipment and travel more. The terms of collection are net 60 so it will be 2 months before he gets paid for services rendered today. He has to pay for supplies net 30 and the employees are to be paid bi-weekly.
Many companies experience this sort of problem, especially when there is major growth in their sales and consequently their Accounts Receivable. The initial stop he did when he saw the problem was to go to the bank and get a bank loan to cover the expenses until the invoices were paid.
Unfortunately, the bank did not look favorably on the application and denied it promptly as there was insufficient financial data to satisfy the bank guidelines.
Fortunately there are other solutions. Discount Factoring. The owner of the company is now going to be able to do the work and then get an advance on the Invoices at a rate of 85% of face value. He will get the balance once the customer pays the bill, less the finance fee.
The client was pleasantly surprised how quick it went from application to funding. It was a mere 6 days, including a weekend from application to funding on this one. Since the company now has access to 85% of all open invoices and only 15% being held in reserve, this is the perfect solution to cashflow constraints.
About the Author Wade Henderson is a recognized Professional in Commercial Lending with over 14 years Experience in the Business Finance Field and a strong reputation for getting the deal done. Visit IMMFinancial.com to put his experience to work for you. Factoring Loan * Invoice Factoring * A R Factoring * Small Business Factoring
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