Why choose Accounts Receivable Financing (Factoring) over a bank loan?
Accounts receivable financing, or factoring, is an excellent alternative to traditional bank loans and is becoming a more and more popular way of raising funding to help your business grow. Factoring is something that can be used by pretty much any industry, from manufacturing to trucking to staffing and many more.
Factoring is a fast and simple way of raising money without having to go through any hassles. When you apply for a bank loan it is a long drawn out process that requires many forms, personal guarantees, lien assets, and they will ask you what you plan to do with the money from the loan. Then, should the bank decide to give you a loan, they also give you an inflexible payment schedule as well as a potentially high interest rate.
However, with factoring invoices, you submit your credit-worthy invoices and can receive immediate payment for them the very same day you submitted them. Furthermore this money is yours and does not need to be paid back so long as there are no problems with the merchandise or service provided. You can spend the money any way you want, whether its for payroll, raw materials, paying off creditors, advertising, expanding your business, or anything else. You also don't need to put up any collateral, you are selling your invoices to the factoring company so there is no need for a lien on any of your other assets.
But getting instant cash for your receivables doesn't just improve your cash flow and provide you with needed money, it also eliminates the need for credit checks and collections. Before you sell your product to a potential customer you submit it to the factoring company for approval. It is the responsibility of the factoring company to run credit checks and make sure that the customer is credit worthy. At DSA Factors we work our hardest to approve accounts submitted to us, while other factoring companies may look for reasons to turn down accounts, we look for reasons to approve them.
The factoring company will also do all the collection work for you as well. When you factor your accounts receivables you are selling your invoices to the factoring company, it is now their responsibility to collect from the customers. At DSA we know that your customers are very important to you so we make sure to always treat them with respect so that you can establish long and profitable relationships with all your customers.
Factoring your accounts receivable can be a very effective way of raising capital quickly and hassle free for both large and small companies. If you have accounts receivable then factoring can work for you. Feel free to call DSA Factors at 773-248-9000 to learn more about how factoring can work for your business.
