Any form of business need capital to perform. Without having capital, no business can successfully run for a long time. However it is true that not all business ventures are cash-rich or they may face trouble to procure generate capital in order to run the same. When one business unit lacks capital, the most preferable way is to apply for a bank loan.
An approval of a Business Loan from a bank needs adherence to various policies, which essentially varies for every banking institution. Some business house may get the loan approved while some may not. Moreover with the increase of bank rate, sometimes it becomes a major problem for the lender to pay back money in time, which eventually results to liquidation of asset in order to repay the loan.
There are other forms of financing available that are not as common as bank loan. Factoring Receivable is one such policy that provides financial support for an organization where receivable takes a longer time, for instance in a garment industry. A factoring works not only on the strength of a client’s potential but rather the clientele. The better the list of customers and their mode of payment, the higher the chances to receive financial help from a factoring agency.
The Factoring Receivable works by providing cash advance to the total value of the invoice that are provided as collateral. An organization seeking factoring receives around 80 per cent of the total invoice value during confirmation and rest of the payment after the payments are received from clienteles by the factor agency. Typically in a factor, the agency virtually takes care of the accounts and they generally take a service nominal service charge.
In order to qualify for a Business Loan, an organization should have strong client base with regular timely payment. Moreover they should not have existing primary liens on the receivable. These two factors are mainly determined by a factoring agency when evaluating an organization for financing.
There are many factoring agencies available and one can find advertisement in newspaper of yellow pages to get in touch with them. Some agencies deal with particular industries while others may have the condition to deposit a certain minimal amount based upon the total cost of invoice or a single one to process the same.
Furthermore it is very much essential to compare some factoring agencies before finalization. The rate usually varies and one should take care to scrutinize every detail before hitting the deal.
Factoring is a very common factor in the industry and is seen as a healthy practice for any business agency.
There are other forms of financing available that are not as common as bank loan. Factoring Receivable is one such policy that provides financial support for an organization where receivable takes a longer time, for instance in a garment industry. A factoring works not only on the strength of a client’s potential but rather the clientele. The better the list of customers and their mode of payment, the higher the chances to receive financial help from a factoring agency.
The Factoring Receivable works by providing cash advance to the total value of the invoice that are provided as collateral. An organization seeking factoring receives around 80 per cent of the total invoice value during confirmation and rest of the payment after the payments are received from clienteles by the factor agency. Typically in a factor, the agency virtually takes care of the accounts and they generally take a service nominal service charge.
In order to qualify for a Business Loan, an organization should have strong client base with regular timely payment. Moreover they should not have existing primary liens on the receivable. These two factors are mainly determined by a factoring agency when evaluating an organization for financing.
There are many factoring agencies available and one can find advertisement in newspaper of yellow pages to get in touch with them. Some agencies deal with particular industries while others may have the condition to deposit a certain minimal amount based upon the total cost of invoice or a single one to process the same.
Furthermore it is very much essential to compare some factoring agencies before finalization. The rate usually varies and one should take care to scrutinize every detail before hitting the deal.
Factoring is a very common factor in the industry and is seen as a healthy practice for any business agency.
No comments:
Post a Comment