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Most sales to industrial customers often carry 30 to 60 day payment terms. This means that as a dealer, you have to offer your services or products now. However, your client has between 30 to 60 days to cover you.

This creates a significant challenge for owners of small and midsize businesses. The problem is simple. Your clients wish to pay you in 30 to 60 times, but you must pay rent, paycheck and your companies now. As you can observe, the math does not work. This results in an almost impossible situation, If you don't have a substantial banking account.

It is also very likely that the lender will not manage to help you, if you're in this situation. Banks only lend to firms that have 36 months of profitable operations and important tough guarantee, as you well know. Your very best bet might be to take into account factoring, If you do not be eligible for a bank financing.

Factoring is just a business financing device that assists business owners who cannot afford to hold back 30 to 60 days to obtain paid by their industrial clients. Factoring gives you the mandatory funds to make rent, meet payroll and pay your vendors promptly.

Factoring is easy to qualify for, Instead of bank financing. The main requirements are that you have a profitable business with a strong roster of commercial customers. For the factoring business, your very best collateral may be the invoices from your own strong customers.

Factoring is also user friendly. It allows you get a substantial part of your billings inside a day of invoicing. It reduces enough time you wait to have paid from 60 days to 2 days. As a two installment purchase of an invoice the transaction is usually structured. The initial installment, called the advance, is paid to you immediately. The progress could be between 70% and 90% of the gross value of the invoice. The rest of the portion (10 percent - half an hour) is used as a book to cover charge backs and disputes. The book is rebated when the account is paid in full. The factoring company will charge a small charge for this service.

Factoring financing is an ideal tool for organizations that are growing and that can not afford to hold back to get paid by the consumers. It helps you to stabilize your financial situation and positions you for progress. invoice discounting