Factoring – Financing Small Businesses Since the Romans

I found a great review about invoice factoring and invoice discounting by Henry Byers – It has a history (since the Romans), definition, list of industries which use factoring, etc.  Remember, credit card factoring / financing has all the benefits of invoice factoring, with less risks.

I particularly like how Byers boils down what invoice factoring is, he compares invoice factoring to a cash advance.  Credit card factoring, on the other hand, IS a cash advance.  It has all the benefits of invoice factoring, with less of the risk.  Here is what Byers’ wrote:

Invoice factoring is not a loan; rather, it’s an outright sale of an asset. Another way of looking at it is as a cash advance: you give up a certain portion of the money you expect to receive in the future in exchange for ready cash today.

Anyone who would be interested in invoice factoring should also check out credit card factoring – I am confident credit card factoring will win out every time.

Byers recommends looking into factoring if you are “…heavily vested in human services and need to be able to meet payroll” or if you are any of the following:

  • A young company with creditworthy customers, but not sufficient credit history for your own business to be considered creditworthy by banks
  • A company with the necessity of taking advantage of new, time-limited sales and profit opportunities, but inadequate cash flow currently to do so
  • Companies with income, credit, or tax problems
  • Companies that have filed for bankruptcy, but that stand to turn a profit
  • Companies that are growing too rapidly for ready capital to keep up with business needs
  • Companies poised to grow very soon but do not want to incur debt
  • Companies that are growing rapidly, but do not have good enough credit to take out bank loans.
  • Start-up companies with no capital base currently
  • Companies with seasonal sales patterns or uneven sales patterns

In any event Byers’ invoice factoring article  has some general info.

Leave a comment

Your email address will not be published. Required fields are marked *