Many small businesses get the cash they need to operate and expand from so-called factors. One of the biggest factors in the business is CIT, and with CIT on the ropes, small businesses are worried. Senior Editor Paddy Hirsch explains what factoring is, and how it works.
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Now I get it!!!!!!!!!! Great job explaining the relationship!!!
Good Explanation.
So the long and short is that CIT and many other colosles should have have been split up for purposes of fire breaks a long time ago.
Now we have a domino chain of monoliths.
when CIT fails, the banks will come in and charge much higher interest rates…i am guessing the govts will not bail out CIT like they did with banks. The Bankers are taking over commerce and finance as we know it. They got their aces.
You say Sam needs money to expand, but he will get 500$ less each month in the deal with Ed. That doesnt make any sense. If Sam need a stady income it should work out fine. But he wont get more money to expand in this way. or am I wrong?
Thank you for your very well explained video. Congress bail out the banks, and now the banks are even stronger than ever and taking advantage of the small people and small business owners. This means that the banks have planned all for their absolute control of money and power. Wow…now I can see clearlier than ever….
What a great explanation……so according to this dude investing in the beverage industry will do well.
he does get less money but the reason that businesses use factoring is because they can get their hands on ‘instant’ finance instead of waiting “30 days”. for instance supermarkets are known to pay their suppliers anything up to 90 days after goods have been delivered.
Easy explanation! Thanks.
It just sucks that when businesses uses factoring, it cuts into their profits. It seems to me that its like a check cashing place for businesses. Well done on the vid!!
hahaha! nice one faz
Excellent explanations as usual. Good job!
The $500 figure was used as an example. In real situations factors rarely charge more than 3%, or $120 on $4,000.
I’m confused. So rather than getting 4000 back from Nordstroms, he gets 3500 back from Ed which is 500 less? How is that better? Why isn’t Ed as much as a risk as Nordstroms? How can the shoemaker guarantee he gets any money back from either of these two?
The factorer assumes ALL the risk because he/she pays for the rights to the receivable UP FRONT. The factorer then assumes all the responsibility to collect on the invoice – that may include followup calls, sending multiple invoices, and possibly never receiving payment (the use of JWN here was a bit misguided (in my opinion) because JWN would almost certainly make the payments on time and without much hassle). I think this is a correct response to your question.
their my shoes!:)
I love your videos! I now have a whiteboard in my living room for my stock trading and it helps me,thanks! I also appreciate that your smart,I live in Las Vegas and I don’t interact with many smart people here,thank god for the internet or I would starve!
How is the relationship between parties effected if say 1/4 of the shoes delivered are rejected by Nordstroms for defects (real or imagined)? Who sucks this up?
i need a drink now