Interest In Invoice Factoring Increases As Credit Markets Dry Up

It’s one question I’m asked a lot:  How often is invoice factoring used?

The answer is a lot! One thing is for sure: When credits market crash, borrowers seek out alternative financing. 

Interest in invoice factoring has increased, if figures from the Commercial Finance Association (CFA), a trade association that tracks asset-based lending trends, are any indication.

A CFA survey found that asset-based loans totaled $600 billion in 2008, a figure that has grown sharply since the 1970s.

As traditional lending sources have dried up, companies have increasingly relied upon invioce factoring to raise much-needed cash. There’s no debt and no banks or credit restrictions involved. And businesses are able to get cash fast — in as little as 24 hours upon approval.

What Is Factoring?
Factoring is not a loan, but the sale of account receivables or unpaid customer invoices to a factoring services provider such as MDS Funding. MDS Funding, as the factor, would collect on the invoice in exchange for an upfront payment to a business.  

No assets are used as collateral, but factors typically use clients’ customer debt to secure funding. So instead of waiting 30, 60, 90-days to get paid, businesses are able to receive cash upfront — before their invoice is even paid by the client.

Invoice factoring is ideal for businesses that sell to customers on credit or have long sales cycles, such as retailers. Many of these businesses use factoring as a short-term financing method.

Unlike traditional lending, the factoring company isn’t concerned about the businesses’ credit; it could care less. Instead, it is, however, concerned about the credit history of  clients that are generating invoices. You may have to provide payment history records, invoice receipts and other documents to show that your clients will pay their invoices.

Remember, it’s your clients who the factor must trust to pay their invoice. The factor doesn’t get “paid” until clients pay.  Upon approval, the factor will typically advance 95 percent of the invoice value. That, along with the factor’s fees, are paid when your clients pay the invoice. 

 

Boost Your Cash Flow With Account Receivables

Account receivables factoring, or invoice factoring, is one of the oldest forms of financing. Businesses have used this type of financing for nearly 500 years as a form of cash flow. It is used by many types of businesses, including service industries, retailers and health care companies.

Interest in invoice factoring has increased, according to the Commercial Finance Association (CFA), a trade association that tracks asset-based lending trends.

A CFA survey found that asset-based loans totaled $600 billion in 2008, a figure that has grown sharply since the 1970s.

There are many reasons to factor your account receivables:

• Get working capital
• Relieve stress from no-pay and slow-pay clients
• Fill more orders
• Increase sales with flexible funding
• Take advantage of vendor discounts
• Fund payroll and taxes
• Extend credit to customers on large orders
• Buy equipment or inventory on demand

Account receivables factoring is a great way to get cash quickly instead of waiting for clients to pay bills in 30, 60 or 90 days. Factoring gives you an advance payment upfront.

So now instead of waiting for clients to pay, you have the cash you need to invest in your business and expand your company.

For more information about how invoice factoring in Atlanta can benefit your business, visit MDS Funding at http://www.MDSFunding.com, contact MDS Funding at                             Â 

Account Receivables Financing Provides Financial Relief

One of the biggest challenges small businesses face is access to capital to finance growth or balance their cash flow. Loans are an option, but with increasingly tighter credit stipulations and closed credit sources, many businesses have turned to accounts receivable financing for relief.

Account  receivables financing is the selling of a company’s outstanding invoices or receivables at a discount to a finance or factoring company.

The factoring company assumes the risk that your clients will pay their invoices; your company receives quick cash — without a loan and with no debt.

Typically, the amount of cash you receive depends on the age of your accounts receivable. A current invoice pays more; anything more than 90 days is typically not financed.

This type of funding has many advantages:

• Avoid collections: Instead of collecting on past due bills, your able to focus on your core business.
• Frees working capital: Many companies invest most of their capital in inventory. Accounts receivable factoring allows you to free up capital.
• Quick financing: You don’t need a business plan, tax statements, a meeting with a loan committee or other complex financial information. You get quick cash.

For more information about how invoice factoring in Atlanta can benefit your business, visit MDS Funding at http://www.MDSFunding.com, contact MDS Funding at