| When faced with financial challenges, most business | | | | becomes even more problematic when you need to |
| owners try to raise capital by going to the bank or | | | | pay rent, employees and taxes regularly. Invoice |
| trying to find investors. Although banks and investors | | | | factoring allows you to finance your business using |
| may be a suitable source of capital for some | | | | your invoices as collateral. Usually, you can get up to |
| businesses, the majority of business owners come | | | | 85% of the gross value of your invoices advanced |
| out empty handed. | | | | to you as soon as you deliver your products and |
| Bankers are notoriously conservative when making | | | | services. As opposed to loans and lines of credit, |
| loan decisions. Unless your business can show that it | | | | factoring has no artificial high limits. The amount of |
| has significant assets and can demonstrate three | | | | financing is directly related to your invoicing. The |
| years of profitability, it usually won't qualify for a | | | | more you invoice, the more financing you qualify for. |
| business loan or a line of credit. Finding investors | | | | Purchase Order Financing |
| (whether angel funders or venture capitalists) is even | | | | Do you own a wholesale, re-seller or distribution |
| more challenging. And those that are successful in | | | | company? What would you do if you received a |
| finding investors always have to give up a significant | | | | large purchase order? An order that you can't afford |
| stake of their ownership before seeing a penny. | | | | to fulfill. Your best option is to use purchase order |
| So, are there any alternatives? | | | | financing to fulfill it. With purchase order financing, the |
| If you own a business that sells products or services | | | | finance company takes care of paying your suppliers |
| to other businesses you have two financing | | | | (usually with a letter of credit) and ensuring proper |
| alternatives. Both are easy to qualify for and do not | | | | shipment and delivery to the customer. Once the |
| require that you give up any ownership. The main | | | | customer pays the invoice, the transaction is settled |
| requirement is that you have a business with solid | | | | and you receive the remaining proceeds. |
| growth prospects and that you provide products | | | | Both factoring and purchase order financing allow you |
| services to good paying commercial customers. | | | | to finance your growing business without giving away |
| Invoice Factoring | | | | equity and without having to go through the |
| Do your customers take 30 to 60 days to pay their | | | | challenges of bank financing. These tools are available |
| invoices? If you are like most business owners, | | | | to new and established companies alike and the main |
| waiting to be paid can be a big challenge. This | | | | requirement is that the company has solid prospects. |