Smart businesses utilize this technique to create opportunity and although this process is common many businesses do not know anything about it. Companies that sell a service or a product can take advantage of this to insure a positive cash flow.
Accounts receivable factoring has been around for more than 4,000 years. The term “to factor” can be defined as the act of buying or selling accounts receivables at a discount. Factoring is not a loan, as a result the process is simple, quick and a no-brainer.
Applying this definition to a business such as a staffing agency illustrates the technique in action, but remember this would also work for a business that manufactures a product, such as shoes or parts for an automobile engine, etc.
Staffing agencies normally invoice either bi-monthly or monthly depending on the contract or agreement. This creates a cash flow crunch for the staffing agency because once the invoice is submitted the client or customer normally has 30 days to make payment. The staffing agency has payroll to meet plus all the other expenses incurred while running a business. What happens if payment is not received in 30 days? Cash flow trouble!
Factoring the account receivable solves this problem. Once an account is set-up the staffing agency can immediately factor their invoice and receive money sooner rather than waiting for payment from their client.
This technique is used by some of the most successful organizations and there are only three steps that need to be completed to incorporate this technique into your business model:
1. Identify a firm that works with multiple funding sources to guarantee the best possible agreement;
2. Complete a simple worksheet to determine the best possible terms. Remember this is not a loan.
3. Allow the certified cash flow consultant to work with the funding sources to set-up an account.
This technique is incredibly powerful and the certified cash flow consultant is paid by the funding source that is ultimately selected. Learn more by visiting [http://www.divergentgroup.com]