| By :
Kristin Gabriel
The bad economic times has caused many small businesses to close down, and now, insofar as profits, the surviving small business people nationwide are looking for ways to cut business costs in the New Year. Even as the last month of 2010 closes with hope for 2011, many smaller businesses are suffering. There is documentation on the use of factoring companies in America some time before the revolution, when animal furs, cotton, and even materials such as timber were shipped from the colonies to Europe. That was when merchant bankers in London advanced funds to the colonists so that the Americans could continue to harvest their new land. During the colonial times factoring companies made financial advances, or in effect loans, against the accounts receivable of their clients, the Americans, enabling them to continue with their work. During the Industrial Revolution when factoring became more focused on credit when they assisted clients in determining the creditworthiness of their customers and setting credit limits. Factoring companies could then guarantee payments for customers that had been approved, speeding up the process. Now factoring companies are much busier - as it is one of the best new ways for small business owners to stay ahead of the game. If you have never heard about factoring companies then you should research the fact that this 4,000 year old business practice is widely used, because factoring allows companies to obtain short-term working capital to grow their businesses, stay afloat during tough economic times and improve cash flow. Ever since the credit crunch banks have become stricter about credit, leaving small businesses that often find it difficult to attract conventional funding. Sadly many new business owners end up having to take out a home equity loan or worse, they must use credit cards to pay off their bills. If you are a small business owner with outstanding invoices from 30/60 or 90 days, take the time to do some research online and look at the long list of factoring companies that can help you get the money now, so you can use it for business expenses that are critical going into the 2011. It's basically an advance on the money that is already owed to you by your customers. Factoring companies like typically do a credit check on the client, make sure the sale represented has been satisfactorily completed and then they will notify the creditor that they have purchased the invoice, and then you will get your funding. The debtor pays the factoring company directly, thereby completing the transaction. Every client's circumstances vary, which could have an impact on the fees charged for spot factoring, also known as single invoice factoring.g. You should definitely think about contacting one of many factoring companies to make them part of your business growth strategy today. It might save your business in the New Year to come.
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