Income Tax Rates

If you're a small business, you may discover that there's a new way for you to get some cash flow when you quickly needed. Factoring, in fact, has become a true blessing for many small businesses. This is because what's called "invoice factoring" can help you restore much-needed liquidity to your business, so that you can make payroll and make necessary purchases even if your cash flow is temporarily less than it should be.

This access to liquid funds is probably the most important aspect of factoring. Businesses cannot survive without cash flow. This is a universal fact of life when it comes to operating your own business. A business must have access to a total flow of liquidity or else it can run into insolvency problems within a short period of time. Once this occurs, the potential collapse of a business may loom overhead.

Of course, many may say that you can simply borrow your way out of the situation, but it may not be a solution for some businesses, for several reasons. If you're in a situation where you've maxed out your current credit and can't secure financing, traditional financing opportunities are probably out of your reach. And because of this, access to quick cash may be significantly curtailed, if not cut off altogether. However, invoice factoring comes to the rescue because it lets you maintain your cash flow so that you can remain in operation.

How does it work? In fact, it's a pretty simple process. You as the company sell cash receivable sheets to an invoice factoring service; in exchange, the invoice factoring service takes a cut of that invoice's balance as its fee. In this way, you get immediate cash in your hands, right away, and are immediately liquid once again. There are very few problems or hassles with this type of program, and there aren't many steps to go through, either. You simply sell any accounts receivable sheets you wish to, and the payment is made to you, right up front.

Here's one example of how factoring can work for you. For example, an accounts receivable sheet may show that a company is owed $500 from a customer. The customer generally settles payments on the first of the month, and this particular customer is very reliable and always pays on the first. However, if the first is two weeks away, this may be a problem. So, the business can go to a factoring company and get $485 cash for that invoice. When the first comes around, the factoring company gets the $500 payment on the invoice, thus making a net profit of $15. It's really as simple as that and the business gets immediate cash flow. This is especially important, of course, if a company needs a quick cash flow infusion.

This service has a lot of benefits available to it, and they're quite vast and varied. Most obviously, you can get liquid cash when other financing options are either limited or even nonexistent. The money can be given to you without interest or excessive fees, which is also a significant plus to you. When you need cash, you need it right away, you need it free and clear, and you don't need to be paying a lot of excess fees in exchange for the cash you receive. Factoring takes care of this, so that you don't have these types of fees.

The expediency in which factoring provides cash is also quite helpful. There is no laborious application process and payments can be made in a rather quick amount of time. This makes acquiring cash infusions easier and less of a hassle.

As such, it is recommended that any company dealing with cash flow problems look into the benefits provided by invoice factoring services. The can provide the necessary cash for a business operation in an expedient and helpful manner. That is why their value can never be overstated.