Media Factoring

Written by Patricia Tunstall
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The media has its peculiarities, just as much of commerce does. One characteristic of business transactions in the media is the multi-pay contract, in which multiple payments are made over time instead of being due in one lump sum at a specific time. These multi-pay receivables represent the factoring aspect of this industry.

Advantages of Factoring for Media

As with any field, media factoring brings immediate cash to a business to enable it to proceed with a contract or purchase order for services or products. This is particularly important in this industry, because commitments may stretch into weeks and months before completion of a project. Few but the largest corporations can sustain good cash flow and working capital over a long period of time without an infusion of cash.

Most media campaigns use easy pay, or multiple payments over time, because it creates new business. Customers are often looking for the best credit terms they can find, and easy pay is enticing. This payment method is, however, rough on the media company or business owner, who must survive on no cash income from this account, possibly for weeks.

By buying the company's accounts receivable, factors eliminate this waiting period and permit the business to finance growth by accepting new commitments from customers. The cash sustains the company and enables it to fund inventory purchases and pay operating expenses. Like most factors, media factors also track and process the multi-pay transactions, so monitoring keeps tight control over the accounts receivable even though they are not completely paid off for extended periods of time.


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