A cash reserve is a set of funds that a company puts aside to handle financial challenges. It is one of the most important financial resources that a company can develop. A reserve provides financial stability and allows you to operate the business more effectively. Unfortunately, many business owners ignore the importance of having a […]
Frequently Asked Questions
Why Do Companies Use Factoring?
Factoring is a product that helps companies that have slow-paying clients. These companies usually can’t wait 30 to 60 days to get paid by clients. Factoring solves this problem by financing their invoices. It provides businesses with cash that they can use to run the business. Companies often use the funds from factoring to: Pay […]
How Do PO Finance Companies Pay Suppliers?
Purchase order financing helps small companies with the supplier costs associated with a large order. It enables small business owners to fulfill large orders and book the revenue. This article discusses how purchase order finance companies pay your supplier expenses. We cover: Why is your supplier asking for a prepayment? Reliable supplier payment methods High-risk […]
The Best Way to Collect Unpaid Invoices
Collecting unpaid invoices is probably one of the most tedious tasks of running a business. However, it’s also the most important one. Getting paid on time is vital to the success of a company. It brings in the money to pay employees, suppliers, rent, and yourself. Consequently, it’s essential to handle collections well from the […]
How Does Accounts Receivable Financing Work?
Companies that work with commercial clients often have to wait 30 to 60 days before getting paid. This practice is known as offering “net terms” and is common in commercial and government sales, where clients often demand terms as a condition of awarding a contract. Offering terms creates a dilemma for companies that don’t have […]
How to Get Credit from Suppliers
Most established companies get credit terms from their suppliers. This credit enables companies to buy goods or services while paying the supplier on net-30 to net-60 terms. Clients usually demand payment terms from their suppliers because it improves their cash flow. They get to use the supplier’s services or products for a few weeks before […]
How is a Subordination Used in Invoice Factoring?
In most cases, setting up a factoring account is relatively simple. Once the factoring contracts are signed, the factor files a UCC lien to secure its position against the accounts receivable, sends notices of assignment, and starts funding the account. Usually, this process is done fairly quickly. Having an existing UCC lien claiming your accounts receivable as collateral […]
What is a Factoring Company?
Summary: A factoring company provides financing to companies that have cash flow problems due to slow-paying invoices. Factors purchase accounts receivable from their clients at a small discount. The client gets immediate funds from the sale of their receivables, which solves their financial problems. The factor, who now holds the receivables, waits until the invoices […]
Should You Offer Early Payment Discounts to Clients?
An early payment discount is an incentive that companies receive from suppliers in exchange for a quick payment. It is usually offered by suppliers that need to improve their cash position. In this article, we discuss: Why are early payment discounts needed? How do they work? Who should get a discount? Advantages and disadvantages Are […]
How Does Factoring Work?
Factoring is a type of financing that helps improve the cash flow of companies that have slow-paying invoices. This form of financing gives the client access to immediate funds, which can then be used to pay for business expenses and to grow. In this article, we show you how factoring works. We go over every […]