Receivables factoring, commonly known as invoice factoring, is a type of asset-based financing and involves selling a company’s invoices in order to receive immediate cash payments before the due date of the invoice.
Factoring is different than borrowing in the sense that the invoices are actually sold rather than offered up as collateral. The result is that your company converts its receivables into immediate cash so that you don’t have to wait for your customers to pay.
Factoring places the time, cost, and effort of collection into the hands of a funding company, such as GMA Factor, giving your business the time to concentrate on other important things. Your business, in turn, receives the cash it needs to fulfill everyday expenses.
Factoring is a wonderful option for companies that need cash quick, but can’t secure a more traditional loan. Factoring is known by many other names, such as: receivables factoring, invoice discounting, invoice factoring and debtor financing.
Factoring is a great way for your business to get the cash it wants or needs without submerging yourself into any additional debt. By selling your company’s invoices at a discount, you can get cash immediately without having to wait for your consumers to pay you. The factoring company is able to make money as well by simply charging a discount fee for their service. Invoice factoring is a little give and take. One company gets the cash they need to grow or keep up with business, while the other is making money while helping out other businesses. If invoice factoring sounds like the right fit for your company and its needs, head over to GMA Factor to get a quote.