Long gone are the days when banks were the only source of credit for businesses and individuals. Those days it was impossible to imagine that there was any other way a business could access funds for the purposes of expanding their business or paying up existing debts.
Debt factoring is a concept that emerged as a breach between those who could not access credit facilities and conventional banks. Contrary to traditional ways of getting a loan from a bank, debt factoring companies operate very uniquely. There is no much paperwork, credit worthiness or supporting documents. It is very simple as long as you have invoices, you are assured to receive cash.
The first advantage of this form of credit financing is that it is quick. Most small businesses and enterprise engage in selling different kinds of products and services. Consequently, they end up having invoices that they draw up for their customers. It is these invoices that are given to factoring companies in exchange of funding. The entire process of verifying the invoices to disbursing funds might take at least 24 hours for most companies. As a business you are able to receive up to 85% of the invoice value.
The other advantage of using debt factoring companies is that the business is spared of the task of debt collection. Despite the fact that the factoring company charges some fee to the debtor, the business still saves a lot in terms of time that would have been spent calling and making trips to request for payment. Since all the invoices are given to the factoring company, they are the ones responsible for following up the debtors and ensuring that all payments are made.
As a result the business can direct all its energy in to the areas that bring more value to the company. In addition, using factoring companies makes the business financially healthy as they will not need extra finances to pay its creditors.
In general, Debt factoring companies have really helped many people and businesses to access funds that they would not have been able in conventional banks. More so, the process involved it getting financing is very simple and takes minimal time compared to the complex processes imposed by other banks. Although the factoring company charges a small fee or discount, it does not compare to the value that the business gets form the financing.