FACTORING

Factoring is based on the largest single category of short-term business financing. Most business to business sales are made on credit terms of 30 days. Commercial trade credit is the reason why modern factoring exists. If all sales required full payment in cash, fewer sales would be made. Thus, to be competitive, most businesses must offer their customers some type of payment terms other than cash. That is why retailers accept debit and credit cards. When a customer pays with plastic, in essence, a business is factoring that sale. The swipe fee a retailer accepts on a sale has the same function as factoring. In both cases it enables companies to boost sales by offering payment terms. Also, factoring a sale enables a business to get paid within a couple of days, instead of having to wait much longer.


For business that primarily sell to other companies, factoring is the easiest type of business financing to qualify for. Once established, a factoring line of credit provides a reliable way to access working capital that is otherwise perpetually locked up in accounts receivable.

If you have any questions about factoring or wonder if your company qualifies, call 541-484-7044.