Why Factoring is Necessary
"A sale is not a sale until you
collect the money"
Are you a part -time banker for
your customers?Take a look at your accounts
receivable aging schedule and count the
number of accounts over 30 days.Congratulations,
you are extending credit to those customers.
You are not getting paid for delivering
your end of the deal in a timely manner
and as a result you are providing
the use of your money to your customer for free.
Not exactly the business you thought
you were getting into, is it?
Ask yourself this question:
If those customers of yours went
to a bank, borrowed the same amount of time,
would they expect to pay a substantial
amount of interest for the privilege?
Of course they would!
And consider this: Not only are
you receiving no interest on that money,
but most importantly,you are also losing the
use of that money while you
are waiting for your customer to pay you.
What is the cost of not having this
money available? In essence, your customers
are asking you to finance their business by
extending terms and allowing them
to pay in 30 days (and usually longer, right?).
But what is it costing you in
"missed opportunities" when your
money is tied up in your accounts receivable?