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General Factoring

Factoring is the converting of accounts receivable into cash by selling outstanding invoices to a 'factor' (factoring company) for a discount. Factoring gives your business immediate cash to manage operations more efficiently.

Many businesses have not considered factoring when looking for financing, possibly because they do not understand it. However, factoring is one of the oldest methods of providing working capital to help businesses solve cash flow needs.

Cash flow problems often occur at the early stages of business development or during periods of rapid growth when completed work is unpaid for 30, 60, or 90 days after issuing the invoice. Thus, businesses often apply for short-term debt financing.

However, conventional borrowing increases business expenses and normally requires additional collateral. Some companies--especially smaller ones--are turned down by banks because of loan underwriting criteria. Equity financing is generally harder to find than debt financing. And, once found, it takes longer to arrange.

With factoring, instead of analyzing the applicant's financial statements, the factoring company, evaluates the strength of the accounts receivable. If the business has a product or service that it provides to a creditworthy customer, then the business is a candidate for factoring.

With your cash flow problem solved, your business has the working capital to:  

- Pay salaries
- Reduce debt
- Improve vendor relations
- Focus on sales and growth

Selling accounts receivable to generate cash is a finance method used by very large corporations worldwide, with the factoring service being provided by the largest banks in the nation. In the past, only large corporations with millions of dollars in receivables per month qualified for factoring. Often factors refused to work with smaller companies and companies with a large number of small invoices. Because factoring is widely known, your customers will view this as a positive ability on your part to secure financing, not as a problem with cash flow.

It's likely that many of your customers already deal with factors and may not even be aware of it. Sometimes payments for invoices directed to a P.O. Box are actually going to a factor. Shell Oil, Georgia-Pacific, IBM and other substantial companies factor millions of dollars of their receivables every year.

Funding obtained through the sale of receivables is most often used by a firm to expand and take on larger projects; not merely for cash flow or payroll. Now that this service is available to companies like yours, you can enjoy both the perception and the reality of being a growing company, moving forward.

JM Capital will consider almost any type of business for a factoring program.  Manufacturing, construction, temporary staffing and many more can qualify for a factoring program to improve their cash flow.  Go to the "Contact Us" page (see above) and either call us or send us an e-mail and we will be glad to aid you in evaluating your situation at no charge.

Contact us today!

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