For most businesses, particularly those that are expanding, starting up in a market or taking on a new contract, finding working capital to address the gap between providing goods or services and payment by your customers can be challenging. However, through business factoring, New Orleans, LA companies can take advantage of funding to allow them to continue to operate between invoicing and payment.
Getting Started
Factoring is a very old method of providing businesses with operating capital based on outstanding invoices for work or goods and services already provided by the business. In business factoring a factor, a third-party company, buys the outstanding accounts receivable and provides a percentage of the total value to the business.
Typically approval for business factoring will be completed within just 24 hours of the company applying for the funding, and then the cash is wired to the company account in days. The amount of the factoring will vary between services, but can be as high as 80% or more depending on several different variables.
No Loan Process
As business factoring is not a loan, there is no need for the company to go through any type of credit checks or long loan application forms. Instead, the factor considers the creditworthiness of your customers since this is where the payment will come from, and not from your business.
Additionally, when the factor takes on some or all of your accounts receivable, all the back-office support associated with those accounts is managed by the business factoring service. This adds to the value of factoring as it frees up your back-office staff from having to deal with notices, collections and managing outstanding accounts receivables.
Obtaining Operating Capital
After the initial amount of the accounts receivables purchased by the factor is provided, there is a hold-back amount of up to 20% of the agreed upon value. This is held until the final invoice is paid to the factoring company by your customer.
After the final payment is made to the factor, the fees for the service are deducted and your business will receive the residual amount wired into the designated account. Top factoring companies provide you with a secure website to check your account and view the status of all the accounts they are managing, allowing you to make the most effective business decisions.
With business factoring in New Orleans, LA your small to mid-sized business has the funding it needs without all the long-term obligations of a business loan. Quick, efficient and time saving, factoring is a very viable option for most businesses to consider.
