Using factoring to provide liquidity

Factoring helps small and medium business enterprises raise cash to meet their credit requirement. Factoring helps in business growth by providing cash to meet your working capital requirement. You can use various types of factoring like account receivable factoring, factoring your credit card receivables, medical factoring, invoice factoring, etc. to provide liquidity for your business. There are many factoring agencies that are willing to discount your invoices. These factoring agencies either charges a fixed rate to factor invoices of a particular value or they charge a fee based on the customer and amount required. These agencies then approach factoring companies who in turn purchase the account receivables at a discount and pay cash to these agencies.

A Factoring company usually makes cash available in less than 24 hours. Since no borrowing is made your credit worthiness is not affected. You will have a strong balance sheet and you are able to get loans easily and low rate of interest. Small businesses don’t have to run behind customers to collect their payments. Instead they can concentrate on their business growth and leave the problem of collections on factoring companies.

The best part of factoring is that you don’t have to provide security which results in business ownership remaining unaffected.