Understanding Invoice Factoring and Receivables Financing
If you use invoice-based accounting, factoring and financing your accounts can be a very efficient way to preserve your cash flow, cut losses from non-paying accounts, and organize your invoicing. Depending on your needs, there are a variety of different options in this arena, but you need to find a partner whose policies match your needs. There are a lot of different options for financing based on your invoices, and using the right one at the right time is the key to maximizing your profits. Whether you factor or finance this time, keep the other option in mind. How Are TheyDifferent? When you finance your receivables, you are getting anadvance against incoming money. Typically, there is some form of recourse ifyour client does not pay, or at least a penalty fee applied when the balance iseventually collected, however long that is. Financing companies are also morelikely to require you to finance all your outstanding receivables at once, tospread the risk around. They take over collec...