January 14, 2008

Use Factoring as Bridge Financing

As we've discussed many times, invoice factoring is a necessary form of financing in our economic structure. If you're considering using this form of financing for your capital need, it should be done on a short-term basis. This is especially true for a business that is experiencing an intense growth period. Accessing capital in this stage is critical, and one of the advantages of invoice factoring is the company's ability to receive funding is only limited by its pool of accounts receivable. By receiving bank financing too early could restrict or limit production.

While factoring does have many advantages, it should not be used as a long-term strategy because of its high cost of capital. Your goal should be to use factoring to get through the tight-squeeze phase of your business cycle until you become "bankable". Factoring should be used as a tool to get your company to the next level.

Kent Harlan, CPA

Ozarks Capital Funding, LLC
www.ocflink.com
kenth@ocflink.com
417.849.7394

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