9 April 2008
Business cash flow issues can be a major problem whether you are a small or large business, but for those just starting, it's disastrous. If you're finding your clients are delaying their payments for a longer period than you can afford to wait, then perhaps you should consider selling what you're owed to a factoring company.
A factoring company will buy your balances owing from you, giving you a small amount of the total initially to help you through. Once they have received payment from your clients, you are paid the rest of what you are owed, minus the factoring company's fees. This allows you to temporarily restore business cash flow before all payment is received.
You will lose out on some of the money you are owed, but factoring essentially works like a loan where what you are owed is used as security. If you can afford to avoid it, you'd be better off doing so, but if you're hurting for cash, then factoring loans could be a sound way of getting some quick business cash.
