Commercial Factoring

Commercial factoring is a financing method whereby a seller uses invoices and the debt account to get immediate cash from a factoring company. To qualify for commercial factoring, a seller has to be in the business of making credit sales. Ensure that your customers have a clean record when it comes to credit payment.

You can qualify for factory financing even if you are seeking financing for a start-up company or a company that has a weak capital structure. It also does not matter if your company has been declared bankrupt or you have accrued tax liabilities.

When you sell services or products to a buyer, the invoice you issue acts as a binding agreement in the transaction. In the event that you need account receivable financing, you will hand over the invoice to the factoring company which will in exchange give you cash inflow.

A current invoice has more bargaining power as compared to an old one. The newer an invoice is, the more cash flow it is able to input in your business. Commercial factoring unlike taking loans is a more convenient and fast way of settling cash flow problems in your business.

The amount of cash flow you will get from a factoring company will also depend on the credit worthiness of your buyers. The more credit worthy they are, the less the risk involved in the whole factoring process.

There is very minimal paper work involved in commercial factoring. No underwriting procedures are involved in the application process. You need not have any collateral, as long as your business involves selling services and products on credit then you are good to go.

Commercial factoring companies should be flexible enough in the short term as well as the long term. When looking for a factoring company, ensure that it is flexible in terms of discount rates. Financing companies should be able to give you cash in terms of direct deposits, electronic fund transfer and any other form of cash transfer that is convenient to you.

After going through the application process, it should take you 1 to 3 working days to get your money. The whole idea behind commercial factoring is to provide easy and quick financing solutions to businesses that operate on credit sales.

To get the best deals on commercial factoring it is advisable to read through sites in the internet. Look for factory companies that have the best in terms of discounts and fee rates. You can negotiate for better discounts based on customer loyalty and credit worthiness as long as you have documents to prove that.

In the recent past, many small and medium sized companies have taken up factoring financing due to its flexibility. Commercial factoring has been very useful because it is a fast way of sorting out working capital problems whenever they arise in a company.