Invoice Factoring Blog

Link: http://www.ifgnetwork.com

Odds are if you run a small business, you'll experience cash-flow problems at some point during the life of your business. Many companies face shortages during the startup phase, while others don't have the cash they need to grow their businesses. There are many things you can do to improve your cash flow, such as focusing on collections efforts or getting professional assistance with budgeting and forecasting. But when these options are not enough, factoring receivables can help.

One tactic, is receivables factoring to relieve cash-flow problems. The practice of selling accounts receivables, or invoices, in exchange for instant cash, factoring is a relatively quick and easy solution for a cash-strapped company. But it comes with a price. A factoring company, just like a bank or a commercial financing company, charges a fee for its services.

First the factor will want to examine your invoices and check the creditworthiness of your customers You should be prepared to show the factor the following:

- A current financial statement;
- An accounts receivable aging report;
- A certificate of incorporation or partnership agreement;
- Proof of insurance, invoices and other business documents.

A factor takes on the responsibility for collecting your receivables, so it wants to make sure your customers pay their invoices in a timely fashion. Once you know which invoices the factor will purchase the factor - like IFG - will typically pay.