factoring
Commercial Factoring Rescues Those Who Could not Pay Loan
Do you know the consequences if one small business is unable to meet their loan obligations? The result isn’t pretty, because you could possibly be sued by the bank that gave the loan if you do not pay – even if the business goes bankrupt.Wondering why? A bank will most likely sue the small business in order to recoup lost loan amounts, especially when it helps them with equity. By suing quickly, they are also trying to get ahead on the creditor line of the bankruptcy proceedings.
The next big question is what will happen when you are late – say for 1 month. The result depends on the foundation and terms of your loan, because most lenders wish to stop the rising small company default rates. The U.S. Small Business Association (SBA) small business loan got a default rate of almost 15 % of its outstanding loan guarantees by mid-year 2010. A loan supported by the SBA is an advantage since your lender can seek the guaranteed part of the loan due to increasing default rates which are major concerns.
The important thing to remember is that if your loan was guaranteed, your obligated 100 percent to pay it back. This also means you will need to create a financial plan if you foresee not able to pay your loan. Think about it this way – try to develop a plan which is based on financing and cost-savings options before speaking to a lender. Think about alternative financing options such as Commercial Factoring. If you have a business that has receivables, it very well may be that you are sitting on your upcoming loan payment. One alternative way to further improve your business’ cash flow is to use factoring.
And remember that the bank can be forced to sue if you don’t eventually make payment arrangements. Making renegotiations in the loan or taking a settlements are only two of what many lenders would do in the situation. Keep your promises, and if you cannot, contact the bank early and tell them you are in the process of looking into invoice factoring to cash in early on some of your company’s invoices from customers for the payment.
The last thing you want to consider is bankruptcy to deal with your small business failure. So in lieu of this tactic, seriously explore using commercial factoring instead, because it just well may be the only way to save your business fairly quickly, so that you can then properly restructure the debt payments.
No Debt, No Waiting Cash Now… Are You Doing Debtor Factoring?
What are your loss because of not using factoring?
Consider the time value of money and the benefits of improved cash flow to your business. By having cash for your invoices within A day are you able to pay your suppliers faster and receive better discounts. Could you fulfill your next order to XYZ Company to make payroll without tapping your line of credit at the bank? Might it be possible for that you offer longer terms to larger customers and get more business? Can improved cash flow help your business grow or survive without incurring more debt at the bank? How is it possible the your debtor factoring fees be outgrown of the improved cash flow you have benefited to your business? Sure it can, the savings alone in taking discounts from your vendors can equal the cost of Factoring. The rest of the savings are in your wallet! Factoring is a great business decision. Why aren’t you doing it?
Is cash needed right away for growth or survival?
Are long billing cycles putting a strain on your enterprise cash flow? Despite increasing sales, does the control over receivables and payables seem like a juggling act? Will your sales improve that you will be able to offer better terms with new and larger customers? Have you been spending too much time collecting from slow paying customers and not enough time building your enterprise? Is your bank turning you down for traditional financing due to years in business, profitability, lack of assets, personal guarantees or financial strength?
Have you contemplated turning away new business due to slow cash flow? These are challenges many businesses face that could be solved with debtor factoring.
Advantages of Debtor Factoring
Simplicity
The advanced funding you get for your receivables and the discount fees you will pay are based solely about the financial strength and credit worthiness of the customers, not your business!
You receive Cash for your unpaid accounts receivable invoices. Usually the factoring company buys the invoice from you for an amount less than its actual face value (70-90%). Once the Factor later collects the full amount of the invoice from your client, you will receive the remainder of the advance less the factoring fee (discount rate). The total amount you intend to factor for a monthly is the basis of your fees.
Flexibility
Need a flexible financial solution that can help your small business be more competitive while enhancing your cash flow, credit score, and supplier discounts? Factor just as much as your want or as little as you need. It’s your choice. No obligations. There are No minimums and No maximums in the amount you can factor. No binding contracts, if that’s what you want.
Unlike traditional bank financing,debtor factoring relies on the financial strength and credit worthiness of one’s customers, not you. Here’s why you should use debtor factoring services:
Offer Better Terms – Win More Business
With Factoring, you are able to attract more business offering better terms on your invoices. Most companies negotiate on price to win business in the competitive market, but with Factoring, you can negotiate with terms instead of price.
With your customers, better terms can be more pleasing than better prices.
It will be possible for you to build the cost of factoring into your costs of products and services if you utilize attractive terms to win business.
Example: A new customer may choose to work with your company since you can offer NET 30 or NET 45 terms while your competitor (the ones won’t be factoring) requires payment up front but includes a 3% better price. One can possibly leverage factoring services to win the business free of charge and improve your cash flow as well like factoring the following invoice at a discount of 3%.
Improve Cash Flow* NO Additional Debt *WIN over customers
Your Business Receives:
* Get cash in 24 hours or less through your outstanding invoices! Eliminate long billing cycles.
* There’s no new debt created. Factoring is not a loan. This allows you to preserve your financial leverage to take on new debt.
* Improved credit score.
* Purchase capital equipment to grow your business.
* Increase inventory for quicker shipments or handle seasonal inventory needs.
* Market for additional business.
* Take trade discounts. This alone can offset Factoring fees and all other savings are gravy!
* Pay back nagging, expensive delinquent obligations.
* End payroll worries.
* Meet tax requirements by the due date. No more exhaustive penalty fees.
* Negotiate discount purchasing.
* Potential profit and unlimited sales.
If you are looking to receive a rise in cash flow and increase your bottom line profits, you need to use debtor factoring now!