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What is Factoring?Factoring is the purchase of accounts receivables by a factoring company at a discount, in order to provide a business with immediate cash to fund its growth. By factoring its receivables, a business owner is no longer forced to wait for customers to pay. Factoring is, in fact, a widely accepted financing option used by many companies of all sizes. Factors provide corporate financing to businesses; however they are not retail or consumer financing companies. If you are a business who sells to its commercial customers on terms, whether net 30, 45, 60 or even 90 days, do you want to be their part-time banker? Do you want to provide your customers with “interest free loans?” In other words, for the period of the terms you extend to your customers, you have essentially become their lender and your customers have become your borrowers, paying no interest on your money. But if your customers paid in cash when goods are delivered or services rendered, that money could be invested, and in one way or another earning money for you rather than giving your customers an “interest free loan.” And without Factoring, if your customers pay late, your costs are even greater. Factoring is a financing arrangement that gives you immediate access to your money to fund your business growth, not to be someone else’s banker. Factoring is a financing option that provides a business with the immediate funding to grow and expand its core business, and allowing it to: take supplier discounts, buy equipment and supplies to take on more orders, improve its credit, make payroll and pay payroll taxes, and meet all of its other financial obligations. In addition, Factoring can allow businesses to outsource accounts receivable management, collections, and credit checking activities to free up resources to concentrate on managing and growing their core business. Simply put, Factoring your accounts receivables enables you to operate more efficiently, by getting paid immediately and putting your hard earned money to work for you now! Contact Grayco Factor Locators today |
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