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Even though Factoring is a very common business practice in Europe, many American business people never heard of it or use it. Factoring has been practiced for centuries; Romans sold promissory notes at a discount and pilgrimage to America was financed with a strike from the coefficient provided money to pay for the trip. The Pilgrims repaid the money with earnings from America. The word “factor” comes from Latin, the language of Rome. It means “to do” or “to make.”
Even the United State Congress recognizes and supports aspects of the transfer transfer requirements of the Act, (31 USC3727) that “the contractor or assignee that may assign its rights to receive payment due for performance” to a financing institution.
This is a project accounts, known as factors.
Factoring is the sale Trade For Cash versus waiting 30, 60 or 90 days, to be paid by customers. Its flexible financial tool that is used properly can help increase the business growth without incurring new or additional loans.
Factoring is not always about cash flow problems, because many of the growth with a reliable foundation. Factoring has made thousands of small companies to bid and wind contracts worth millions of dollars in government and business
Industries that use Factoring the normal course of business are employment agencies, distributors, manufacturers, Government Contractors, Freight Company (BOL) and importers of the acquisition of funding. It does not matter if the business is a start-up, high-growth companies, under-capitalized, or companies with cash flow problems. Most factoring companies do not even require financial statements; something like “no docs” real estate loans!
Factoring differs from banks mainly because the bank takes credit decisions based on financial history, cash flow and collateral. Factoring bases its decision on the credit-worthiness of your customers. Because of factors is not a loan, no liability appears on your balance sheet.
Factoring can take as little as 48 hours and take up to 3 to 4 weeks of public contracts. The good part is, when you have components in place, it takes only a few days, or less, to wire money into a business account when Factoring Company has received accounts.
Factoring companies do not let growth up to change. They actively participate in screening new vendors for your business as well as to collect accounts and management accounts requirements relating to them. And the IRS subsidize the cost of this because all the costs associated with factors is tax deductible.
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