The Commercial Finance Group has worked hard to become Atlanta’s top choice for factoring finance services. Thanks to the dedication and skills of our financial team, we’ve been able to diagnose cash flow problems in small to mid-size businesses across the Southeast, creating customized cash flow solutions that help companies grow and thrive.
Factoring Finance May Be The Solution Your Business Is Looking For
One of the most popular of these financial solutions is factoring, a process that allows companies to free up the working capital they need without going into debt that they don’t. We’re always surprised how many people contact us without really knowing what factoring is or how it can help their business. In most cases, these people were referred to our factoring company by a friend or financial adviser who knows that it could be the solution they’re seeking.
To encourage more business owners to get educated about factoring, we’ve put together a list of interesting facts about factoring and how it can benefit your organizational efforts far into the future.
3 Interesting Facts About Factoring
1. Factoring Is One Of The Oldest Forms Of Business Financing
Although it’s only recently become a very popular alternative to commercial loans, factoring is actually one of the oldest forms of business financing. According to a presentation about the history of factoring made by David B. and Jeremy B. Tatge of Epstein, Becker, Green to the International Factoring Association in 2012, the process began with the Mesopotamian traders way back in 2,000 BC.
“Merchants made cash advances to the agent, who gave the merchant a negotiable promissory note,” explain Tatge and Tatge. “The merchant could borrow against the agent’s note…or sell it…if the not was sold, always at a discount, the right to the ordered goods passed with it.”
2. Factoring Doesn’t Increase Your Debt
Although we talk about factoring in the context of asset-based loans and other lending solutions, it actually has no impact on liabilities in a company’s balance sheet. Instead of creating working capital by borrowing it from a traditional financial institution, factoring allows companies to increase cash flow by liquidating outstanding invoices. These unpaid accounts are sold to a factoring company at a slight discount, at which time they’re no longer the responsibility of the business from which they originated. The original business gets cash, while the factoring company profits when the invoices are paid.
3. Factoring Finance Is A Short-Term Solution For Growth
For some reason, factoring is often misunderstood as a last-ditch solution for businesses that are about to find themselves underwater. While factoring can sometimes be helpful in the case of cash flow problems, it’s mainly a tool for growth. Companies who are too young to be considered “bankable” by traditional lenders, yet in dire need of working capital to keep up with demands for their goods or services, often find relief in factoring.
The Commercial Finance Group Is Your Factoring Company In The Southeast
If you’re managing a growing (or struggling!) small to mid-sized business, please don’t hesitate to contact us about the ways in which factoring could maximize your working capital. With our help, you could be well on your way to realizing your professional goals! Get more information now.
