How a Company can Improve its Gross Margin with Factoring

"If I'm to pay a 3% factoring fee, and my profit margin is only 3%, how can my company benefit?
A company making only a 3% net profit margin can do more business volume as a result of invoice factoring, and the larger volume will result in a higher profit margin because fixed costs do not increase with volume. The added business at a higher marginal profit leads to an increased overall profit margin. As the volume increases, the cost of production decreases, so that profits increase. Fixed costs such as rent, trash expense, and administrative salaries generally don't increase with a volume rise. Utilities, telephone, and workmen's compensation insurance are expenses that will rise slightly, but not nearly as much as production costs do. Therefore, a company utilizing accounts receivable factoring can increase its volume and profit level.
kenth@ocflink.com
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