Why Don't More Companies Factor Their Inivoices?

Although factoring volume has grown every year since 1984 and is a favorite financing tool in several industries. many companies don't take advantage of it. Many people have the misguided belief that factoring fees are in same range that loan sharks charge. There was a time (several decades ago) when factors took advantage of companies in bad financial shape and had nowhere else to turn. Those days are over. With the increase in competition among factoring companies, rates are still higher than bank financing, but affordable. If a company has a reasonably healthy profit margin, invoice factoring should be considered if a bank turn down has occurred.

Factoring can be beneficial for most any industry that carries business to business receivables. Manufacturers, distributors, and service providers are all industries that can free up working capital now rather than wait 30 to 60 days and beyond to get paid by their customers.

Kent Harlan, CPA
www.ocflink.com
(417) 849-7394