| Learn how to use invoice factoring to finance | | | | paying invoices. The mechanics are simple. You sell |
| your growing (or startup) security guard agency. | | | | the invoice to a factoring company, who pays |
| Although conditions are improving as we are | | | | you for it upfront. This provides you with the |
| emerging from one of the worst recessions in | | | | funds you need to meet your companies |
| history, getting business financing remains very | | | | expenses. The transaction is settled once your |
| hard. This is difficult for small companies because | | | | client pays the invoice in full. Factoring companies |
| they are having the hardest time getting financing | | | | always structure the purchase in two parts. The |
| even though they need it the most. Outsourced | | | | first part, called the advance, covers 80% to |
| labor companies such as security guard companies | | | | 90% of the invoice and is given to you |
| and staffing agencies are noticing a significant | | | | immediately. The second part, which is the |
| improvement in their sales but can't follow | | | | remaining 10% to 20% is provided once your |
| through because they are not well financed. | | | | client pays. The factoring fee is usually deducted |
| To make things harder, commercial customers | | | | from the second transaction. |
| that used to pay their invoices in 30 days are | | | | Invoice factoring has been gaining popularity in the |
| now taking 45 days or longer to pay. This creates | | | | past few years. And in many circumstances, |
| a serious cash flow problem, since security guard | | | | invoice factoring can provide a better solution |
| companies need to cover payroll on a weekly | | | | than a business loan. Furthermore, factoring is |
| basis. Few companies can afford to wait that long | | | | easier to get than most business loans. |
| to get paid. | | | | A major advantage of accounts receivable |
| One way to solve this cash flow problem is to | | | | factoring is that factoring companies look at the |
| shorten the time between delivery of services | | | | credit quality of your invoices as one of the most |
| and receipt of payment. Since asking clients to | | | | important parameters in their funding decisions. |
| pay sooner seldom works, the alternative is to | | | | This means that small but well run companies |
| use invoice factoring. | | | | whose only asset are invoices from good clients |
| Invoice factoring provides an advance on slow | | | | can usually qualify. |