Business Receivable Factoring
Business receivable factoring is when a third party purchases existing, uncollected invoices from a business at a discounted rate. In return the business receivable factoring company gives the business money. The business receivable factoring company will get paid the receivables as they are collected.
Business receivable factoring is often needed by businesses when there is a long delay (typically 60-120 days) between when they invoice their customers and when they collect the money. Many businesses sell products that allow customers 6-12 months to pay. This can create major cash flow issues for even the largest companies. Business receivable factoring companies have been around for many years because of the nature of how many companies extend terms to customers.
RapidCapitalFunding's merchant cash advance program has many similarities to business receivable factoring however the two are quite different and should not be confused. The biggest difference between the two is that business receivable factoring requires the sale be made before it can be originated. The merchant cash advance program is based on future credit card sales therefor does not require the sale to have taken place. With a merchant cash advance a portion of future credit and debit card sales are purchased.
As difficult as it is to manage cash flow in your small business today, business receivable factoring can be a good way to manage cash flow.
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