|
As a business owner, you recognize the value of your Accounts Receivable (AR). Though it represents revenue, your Accounts Receivable falls critically short of being “money in the bank”...Until Now!
Factoring has become one of the preferred methods to provide working capital for businesses and healthcare providers. This service is useful when you cannot afford to wait 30, 60, or 90 days to collect payment from your customers. The same holds true for healthcare providers waiting on claims to be paid by third party insurance companies.
You sell your accounts receivable (invoices or insurance claims) to a specialized financial institution (Factor). The factoring company will advance you an amount less than the face value of the invoice or insurance claim, usually between 70% and 80%. When the Factor collects the full amount of the invoice or insurance claim), you will receive the rebate (Face Value minus the Advance minus the Factoring Fee).
Unlike borrowing money, factoring is NOT a loan; there is no debt to repay. You improve your cash flow, your balance sheet is more attractive, you retain 100% ownership and control of your company, and your financial position is strengthened. Loans require collateral limited by your assets, and your bottom line is reduced by the interest expense. Factoring is a no-debt solution to improving your cash flow.
|
