Recently I had a client contact me looking to take out a Factoring Loan. It has been some time since I had heard it referred to as this, but what he was referring to was Accounts Receivable Factoring.
Technically, Factoring is not a real loan; it is an advance on money that your company is already owned. While the accounting guidelines can be argued one way or another, the fact is, when a Factoring Loan is done, the Receivables are verified with the party that owes the money and further verifies that they are going to pay the invoices.
Under this circumstance, the funds that are advanced to the company that raised the Invoices are merely an advance on the funds that will be collected under the short term agreement.
Other people refer to Accounts Receivable Factoring as Invoice Factoring. This is accurate and is only switching out the terms Accounts Receivable for Invoice so there is little confusion over this.
The fact that the US Government is now creating an Invoice Factoring facility or Factoring Loan for many of the suppliers in the Detroit Michigan area is a very positive vote of confidence for the validity and acceptance of Invoice Factoring or the Factoring Loan not to mention the confidence that is now being generated in the economy.
The manufactures of United States and Canada have been torn apart by the recession we are currently in and many businesses have fallen due to the lack of working capital to pay suppliers, payroll and other operations expenses that the businesses need to support regardless if there are collections on their Accounts Receivable or not.
Unfortunately several companies in the manufacturing industry have not been able to make it through our recession, many of which were generational family businesses and they suffered to the point of closing down. I know of one such company that was started in 1937 by the Great Great Grandfather of the owner that had to close the doors of the family business due to cash flow problems.
Whether you call it a Factoring Loan or Invoice Factoring or something else along those lines, be sure to take advantage of this Financing method for your business.
Author: Wade Henderson
Wade Henderson is a recognized Expert in Business Finance with over 14 years Experience in the Commercial Lending Field and a strong reputation for getting the deal done. Visit his Commercial Finance Website to put his experience to work for you.
* Commercial Factoring * Receivable Factoring * Invoice Factoring
Be sure to View Pro-BargainHunter.com and IMMFinancial.com for more information.
Article Source: http://EzineArticles.com/?expert=Wade_Henderson
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