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Previous: Holiday Office Parties: Make the Spirit, Not the Spirits Memorable by Janet Attard Are cash flow problems slowing your business down? Has a growth in sales brought on a growth in receivables and a shortage of cash on hand? Do you have suppliers who need to be paid now but some big new customers who won't pay for 45 to 60 days? If the bank is skittish about increasing your line of credit, one quick solution to your problem could be factoring. Factoring is a means of raising cash by selling your accounts receivable invoices to a third party (the factor) at a discount. The factor buys your invoices for cash, paying you an agreed upon percentage less than the value of the invoices. Then, the factor collects the full amount due from the customer. To qualify for factoring, you need to have customers who are credit worthy and have enough of a profit margin built into your pricing structure to allow for the discount rate the factor charges. Comments how i can be sure that the client is credit worthy?? Posted by: yasser omar on January 14, 2009 at 6:03 AM Making sure the client is credit worthy is something you should do *before* the sale. You would do that by running a credit check on them. There are a couple of article you should look at on this site that talk about that: http://www.businessknowhow.com/money/seller.htm After the fact, it will be more difficult to determine. If payments are already late, it will either prevent you from selling invoices or make the cost of doing so very high. If that's what you're dealing with (late payments from customers) than check out these articles for suggestions on collecting. http://www.businessknowhow.com/money/collections.htm Posted by: Janet Attard |
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Disclaimer
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Copyright 1999-2008 by Attard Communications, Inc. and by the individual authors. |
Factoring cost money! Get your customers to pay on time. Or give a discount for early payment. It cost less than factoring!
Posted by: Bronson on December 15, 2008 at 7:15 PM