Accounts receivable finance-related articles.
Invoice Factoring Gains Popularity As A Short-term Working Capital Source
Up until the 1970s, invoice factoring (the sale of accounts receivable for cash) was a little known source of small business financing. Since then, however, accounts receivable factoring has grown steadily in the United States; accounting for $130 billion in business in 2008. As a pioneering factoring company with a history that spans five decades, Riviera Finance has been at the forefront of ushering factoring into the mainstream as an alternative to traditional small business loans and an effective way for businesses to increase working capital.
Because barriers to entry are low and industry information is readily available, hundreds of small factoring companies have been formed in recent years and factoring no longer has the mystique it once had. Articles, websites, associations, and other sources of information are prevalent, and the industry has a heavy advertising presence. And while factoring is a risky business and capital isn't quite as easy to come by these days, it is still very profitable for experienced factoring companies.
More importantly, invoice factoring is a cost effective way for small businesses to secure cash on hand.
There are a number of factors that make factoring cost effective rather than costly. For one, rates have come down considerably due to the sheer number of factoring companies on the market today. In addition, non-recourse factors are likely to guarantee credit, thereby eliminating bad debt. Full service factors also offer helpful services within their rates; serving as a back office of sorts by pulling and approving credit, making collections, processing invoices, and more. Such services allow for a significant reduction in administrative expenses.
Factoring has become an even more attractive financing alternative in the wake of today's credit environment. The simple truth is that standard bank financing is much harder to come by these days, and it's likely that, given the current financial climate, banks will be tightening the reins even more for the foreseeable future. As large
companies default and file for Chapter 11 protection, it's become clear that bad debt protection is an increasingly valuable asset. These days businesses who've done their due diligence have come to realize that they can use factoring as a bridge to permanent bank financing.
Riviera Finance invites you to learn more about how factoring can help your small business in uncertain economic times by using your accounts receivable to increase cash flow.
