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INVOICE FACTORING
INVOICE FACTORING
Cash flow problems often occur at the early stages of business development, during periods of rapid growth, or through seasonal fluctuations in a business.
Many businesses have not considered factoring when looking for financing, possibly because they do not understand it. However, factoring is one of the oldest methods of providing working capital to help businesses solve their cash flow needs.
With factoring, instead of analyzing the applicant's financial statements, the factoring company evaluates the strength of the client's accounts receivable. If the business has a product or service that it provides to a creditworthy customer, then the business is a candidate for factoring.
With Capital Sources invoice factoring can allow for a healthy cash flow. Your business will have the working capital to pay salaries, reduce debt, improve vendor relations, and focus on critical success factors like operations, sales, and growth.
Example Transaction:
You have a $100,000 invoice with 30 day terms. A lender, for example, may immediately advance you 85% of that amount and holds the rest in reserve. Your customer then pays the invoice two weeks later. After subtracting a processing fee, for example 3%, and a per week factoring fee, for example 1%, the financing company gives you the balance of the reserve left over.
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