bayanipay of the term “mortgage” to a business owner is often enough to elicit a very strong and visceral response and the easy truth of the matter is that the average business bank loan is a fairly contentious and controversial subject within the business community. On one hand, a bank loan provides the business enterprise owner with a source of capital that they otherwise would not have, which in turn can mean that bold ambitions of expanding and developing the business enterprise in a particular direction could be more fully achieved and accomplished with at the least disruption.
That is especially significant in highly competitive sectors of the market, as any way of measuring delay can ultimately result a business that chose to postpone any sort of development or alterations to the manner in which they do business being overtaken by way of a rival. The downside here however, is that the loan will undoubtedly be required to be paid back and so if the business is struggling to generate enough revenue, or worse yet, is already in debt, then the repayment maybe too much of a burden because of its finances.
Furthermore, in order to actually access a bank loan, a business will typically be asked to secure assets that it owns as collateral, therefore a noncompliance with the terms of the loan will ultimately imply that the assets secured as collateral maybe seized by the lending company.
Thankfully, there is an alternative solution strategy for the struggling business proprietor who is seeking to secure another external source of capital finance to supply their company with a much needed kick start: a receivable financing company.
A receivable financing company, or a factoring agency because they oftentimes referred to within business parlance, is really a business entity that will purchase outstanding invoice accounts from the company and then provide the client company with a sum of money upon receipt of the invoices. The receivable financing company will then assume full, responsibility for the collection process of the money owed by your client specified on the invoice.
Once the client has paid the full balance owed to the receivable financing company, the factoring agency will release the remainder of the funds owed to your client company….with a small deduction created from the funds received from your client so as to cover the expenses they have incurred.
One of the major benefits of using a factoring agency is that the client company will be guaranteed to receive a fairly large amount of money in an extremely short time indeed which effectively eliminates and protects against the risks that an unpredictable and capricious amount of cashflow will pose to a client company.
Furthermore, this method of business financing will effectively mean that the agency is in charge of the collection process thereby freeing up enough time and money of your client company who will not need to cope with the chasing up of fees or commissions owed.