Commercial Factoring

Written by Linda Alexander
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Businesses use commercial factoring for many reasons, but most often it is to gain greater control over their receivables. While businesses can manage most aspects of their operations, when they get paid is usually controlled by the customers. If they do not pay in a timely manner, it can seriously hurt operations. Thus, many businesses turn to factoring as a way to improve cash flow.

Commercial factoring is a growing field and is no longer used only by companies that are in financial trouble. Nor is it used solely by businesses who cannot secure other types of financing. In many cases, factoring is one of the first financing options businesses take advantage of. It offers immediate cash on unpaid invoices, it is a flexible tool, and it also is a way to manage the collection process effectively.

In fact, some businesses use commercial factoring just for collections. They do not even sell their receivables to the factoring company. They simply use factoring services to collect overdue payments. This works especially well for small companies that do not have regular accounting staff.

Advantages of Commercial Factoring

Commercial factoring lets you concentrate on your business: your sales and marketing, your manufacturing and production, and your planning process. You no longer have to spend valuable time on the clerical details of collecting from late payers. It might even give you a competitive edge, since you will have more cash to work with and more time to aggressively pursue new accounts.

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