Running a small to mid-sized business takes a lot of financial knowledge, and even in highly profitable and successful companies there can be challenges. When cash flow issues are a concern, turning to factoring accounts receivable in South Carolina makes very good business and financial sense.
It is essential to understand that factoring accounts receivable is not a loan and, therefore, the process to be approved for the funding is very different. Unlike the lengthy process expected for a business loan from a bank, factoring takes just days from the application until the cash is in your account.
How it Works
Factoring has actually been used for centuries in business, and it is the basis that credit cards work. As the small business owner you provide a service or a product for your customer, then invoice the customer and are paid based on the terms of the sales. For many B2B transactions, or business to government contracts, the terms of the sale may be 30 to 90-days.
When you choose to factoring accounts receivable the factoring company simply buys the accounts receivables you wish to sell, providing you the funds based on a percentage of up to 80% of the value.
The factor then assumes the collection processes for the accounts receivable. When the invoice is paid the factor deducts the fees for the service and forwards any residual amount.
What You Do
As a South Carolina business owner, you really have very little to do in the process. The first step is to fill out an online application for factoring accounts receivable services. Approval by top factors is provided within 24 hours on business days.
There is no personal guarantee needed and no need for lengthy applications. There is no financial data collected on your business, as the factor is considering the ability of your customers to pay when approving your request for factoring.
Top factors will provide their clients with a secure online site to monitor the accounts the factor is handling on your behalf. This allows you to know the status of each invoice and to budget accordingly.
If you are considering factoring accounts receivable be sure to check for costs and fees associated with the service. Top factoring companies are transparent in their fee structure and don’t charge for either the application or for termination, and there won’t be any contracts to limit your options moving forward.
